-----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, FgkG02hhm4HyRLEsmcNltTEFVIBOnh7seYGeL9KAIX3djLLmIAu3tDmIHiWgjGV+ /D8jZ66ZQzv6H747pqP7IQ== 0001025770-98-000019.txt : 19980630 0001025770-98-000019.hdr.sgml : 19980630 ACCESSION NUMBER: 0001025770-98-000019 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980430 FILED AS OF DATE: 19980629 SROS: NONE 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: 98655985 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 SEMIANNUAL REPORTS Dear Fellow Shareholders: Investment Results - Semi Annual Fiscal Period Ended April 1998 The GLOBALT Growth Fund (the "Fund") ended the first half of its third fiscal year with a 20.16% total return for the period. The Fund has returned 90.67% (net of fees) since inception December 1, 1995, surpassing an 88.73% gain for the Russell 1000 Growth Index while slightly lagging a 92.38% gain for the S&P 500 Index during the same time period. shapeType75fFlipH0fFlipV0fLockAspectRatio0pib[GRAPHIC OMITTED] Investment results since inception have been as follows:
- ---------------------------------------------- --------------------- --------------------- --------------------- Periods Ending 4/30/98 GLOBALT S&P 500 Russell 1000 Comparative Investment Returns (a) (b) Growth Fund Index (c) Growth Index (c) - ---------------------------------------------- --------------------- --------------------- --------------------- - ---------------------------------------------- --------------------- --------------------- --------------------- Last Quarter 15.29% 13.84% 13.35% - ---------------------------------------------- --------------------- --------------------- --------------------- - ---------------------------------------------- --------------------- --------------------- --------------------- Last 6 Months 20.16% 22.50% 23.05% - ---------------------------------------------- --------------------- --------------------- --------------------- - ---------------------------------------------- --------------------- --------------------- --------------------- Average Annual 1 Year Return 40.74% 41.07% 42.13% - ---------------------------------------------- --------------------- --------------------- --------------------- - ---------------------------------------------- --------------------- --------------------- --------------------- Average Annual Return Since Inception (d) 30.65% 31.09% 30.06% - ---------------------------------------------- --------------------- --------------------- --------------------- - ---------------------------------------------- --------------------- --------------------- --------------------- Total Return Since Inception (d) 90.67% 92.38% 88.73% - ---------------------------------------------- --------------------- --------------------- --------------------- (a) Past performance is not predictive of future performance. (b) The GLOBALT Growth Fund's historical results are net of all expenses, versus the gross market benchmarks (the S&P 500 Index and the Russell 1000 Growth Index). Investors are reminded that when trying to achieve benchmark returns, investment management fees, transaction costs and execution costs will be incurred. (c) 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. The Russell 1000 Growth Index is an unmanaged index of 1000 selected "growth" oriented 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. (d) From December 1, 1995.
The Fund ended April 1998 with $11,116,820 in net assets and more than 70 shareholders. 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) participants have elected to be investors in the Fund. 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 foreign markets. The Fund only invests in stocks of U.S. companies that are expected to derive at least 20% of their revenues outside the U.S. Once we construct portfolios, the connection you have to the global marketplace, by being an investor in the GLOBALT Growth Fund, is much greater: the portfolio derives at least 50% of revenues from outside the U.S. Fund Performance Relative to Benchmarks The Fund underperformed versus the benchmarks for the six months ended April 30, 1998. The Fund rebounded strongly during the last three months of the period, steadily outpacing both indexes. The Fund has beaten the Russell 1000 Growth Index since inception while at the same time its +30.65% return is less than half a percent lower than the S&P 500 Index return for the same period. We are pleased with these results for the last six months, particularly given the strong performance of two sectors in which we are not represented, Consumer Durables and Retail. Commentary and Outlook In our last report in October of 1997 we wrote to you that the economic framework for investing continued to be very positive although the short-term risks were heightened because of the chaos in the Southeast Asia currencies and economies. The U.S. market has divined that the damage in Asia is very real but that its effect on economic sectors and individual companies varies widely. Overall, the impact has not been great enough to bloody a very resilient U.S. economy. Long-term, we remain very positive on the U.S. equity and bond markets, and we also believe that the current turmoil in Asia presents U.S. companies with significant opportunities to strengthen their positions and add to profitability. However, after many quarters of outright bullishness, we began to take a slightly more defensive posture 12 months ago - reducing Asian exposure and taking earnings uncertainty out of portfolios. With the market now 16% higher than it was at the end of 1997, we are more cautious on a short-term basis. What concerns us? The U.S. is only now seeing the leading edge of the Asian fall-out: a growing trade deficit and lower employment and sales in the industrial sector. Although the market has looked through the news to date, we probably haven't seen the worst yet. Flattening growth in corporate profitability, more downward company earnings revisions. More difficulty finding valid re-investment opportunities in the market with the Dow Jones Industrial Index at the 9200 level. Very high volatility in the market. And finally, representing a change in investor sentiment, investors' opinion has shifted conclusively to the bullish side. If the market "climbs a wall of worry," complacency could bring a short-term dose of reality that the market goes both ways. For the intermediate term we fear the very real possibility that the Year 2000 computer code conversion could cause serious business interruptions in late 1999 and 2000. We continue to analyze this issue and will have further comments next time. Having made a disclaimer, what course are we pursuing in the GLOBALT Growth Fund? Our conviction regarding the longer term potential for U.S. equities, plus respect for the unreliability of market forecasting, is sufficient to keep us invested. As before, we will retain a moderate amount of reserves - in part to give us the flexibility to be opportunistic in any general pullback or to respond to individual stock volatility. We will be disciplined about "reaching" or paying up for even the best companies after pronounced upward moves. Our response to flattening corporate profits will be to concentrate portfolios in the companies in which we have the highest conviction in the earnings outlook and/or relative valuation. This is a significant shift. The process began twelve months ago, and has resulted in a reduction in holdings from 58-60 to 43-44. Sector balance is essentially unchanged, maintaining portfolio diversification. Diversification is still a valid concept. Over-diversification is counterproductive to investment returns. Our biases continue to favor larger, higher quality companies with greater exposure to the U.S., Latin American, and European economies over exposure to Asia/Japan. While we now are giving a higher probability to a market decline, we expect it to be limited to a relatively shallow and short-lived correction. The recent events in Asia are proving again the strength and resourcefulness of U.S. companies. Only partway through the corrective process, the evidence supports our even higher conviction that the best way to access international growth is through globally-competitive U.S. companies. U.S. companies are being tested, and they are demonstrating that they are up to the task. We thank you for your continued confidence in the GLOBALT Growth Fund and, as always, we welcome your questions or comments. Sincerely, Angela Z. Allen President and Chief Executive Officer AZA/gl Fund Investment Shares of the Fund are sold on a continuous basis. The Fund's NASDAQ symbol is GROWX and can be used at any broker dealer or financial institution where the Fund is available for purchase unless otherwise noted. Through the Fund's transfer agent, American Data 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 Charles Schwab's 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. 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: AVGGF). Fidelity can be reached at 1-800-544-9697. GLOBALT Growth Fund Schedule of Investments - (Unaudited) - April 30, 1998
Common Stock - 99.0% Shares Value Business Equipment & Services - 4.3% Interpublic Group 3,175 $ 202,803 Omnicom Group 5,800 274,775 --------------- 477,578 --------------- Capital Goods - 8.4% General Electric Co. 5,700 485,212 General Telephone 7,700 449,969 --------------- --------------- 935,181 --------------- Chemicals - 2.0% Monsanto Co. 4,200 222,075 --------------- Consumer Non-Durables - 15.5% Avon Products Inc. 2,700 221,906 Campbell Soup Co. 4,500 230,906 Coca Cola Company 3,050 231,419 Coca Cola Enterprises 7,900 298,225 Colgate-Palmolive Co. 2,800 251,125 Gilette Co. 1,000 115,437 Procter & Gamble Co. 2,600 213,687 Sara Lee Corp. 2,600 154,862 --------------- 1,717,567 --------------- Consumer Services - 7.6% Disney (Walt) Co. 2,700 335,644 Mattel Inc. 5,500 210,719 Time Warner Inc. 3,750 294,375 --------------- 840,738 --------------- Energy Sector - 6.4% Dresser Industries 4,400 232,650 Halliburton Co. 5,400 297,000 Texaco Inc. 3,000 184,500 --------------- --------------- 714,150 --------------- Financial Services - 17.7% American Express 2,600 265,200 American International Group 2,675 351,930 Franklin Resources, Inc. 3,000 160,500 Household Intl, Inc. 2,100 276,019 Merrill Lynch & Co. 3,600 315,900 Marsh & McLennan Co. 3,500 318,937 Morgan Stanley Dean Witter Discovery 3,540 279,217 --------------- 1,967,703 --------------- Health Care - 16.4% Baxter International Inc. 5,400 299,363 Becton Dickinson 3,600 250,650 Bristol Myers Squibb 2,400 254,100 Guidant Corp. 3,500 234,062 Johnson & Johnson 3,312 236,394 Lilly Eli & Co. 5,200 361,725 Pfizer Inc. 1,600 182,100 --------------- 1,818,394 --------------- GLOBALT Growth Fund Schedule of Investments -(Unaudited)- April 30, 1998 - continued Common Stock - continued Technology Sector - 16.5% Shares Value Cicso Systems Inc. (a) 1,575 $ 115,369 Compaq Computer Corp. 5,100 143,119 Computer Assoc. Intl 4,700 275,244 Computer Sciences (a) 5,600 295,400 Emerson Electric 3,300 209,963 Lucent Technologies 3,680 280,140 Microsoft Corp. (a) 2,000 180,250 Xerox Corp. 3,000 340,500 --------------- 1,839,985 --------------- Transportation - 4.2% AMR Corp.(a) 1,700 259,039 Federal Express Corp. (a) 3,100 210,800 --------------- 469,839 Total Common Stock - (Cost $8,512,294) 11,003,210 --------------- Money Market Securities - 1.0% Star Treasury - 4.96% 12/31/98 (Cost $117,682) 117,682 --------------- TOTAL INVESTMENTS - (Cost $8,629,976) - 100.0% 11,120,892 =============== --------------- Liabilities less other assets (2,228) --------------- Total Net Assets - 100.0% $ 11,118,664 =============== (a) non-income producing
GLOBALT Growth Fund April 30, 1998 Statement of Assets & Liabilities
Assets Investment in securities, at value (cost $8,629,976) $ 11,120,892 Dividends receivable 7,132 Interest receivable 1,243 Reimbursement receivable from advisor 1,844 -------------------- Total assets 11,131,111 Liabilities Accrued management fee payable 10,759 Other payable and accrued expenses 1,688 ------------------- Total liabilities 12,447 -------------------- Net Assets $ 11,118,664 ==================== Net Assets consist of: Paid in capital $ 8,517,890 Accumulated undistributed net investment income (43,913) Accumulated undistributed net realized gain 153,771 Net unrealized appreciation on investments 2,490,916 -------------------- Net Assets, for 649,444 shares $ 11,118,664 ==================== Net Asset Value Net Assets Offering price and redemption price per share ($8,002,674/649,444) $ 17.12 ====================
GLOBALT Growth Fund Statement of Operations for the six month period ended April 30, 1998
Dividend Income $ 47,965 Interest Income 18,341 ------------------- Total Income 66,306 Expenses Management fee $ 56,010 Trustees' fees 1,844 --------------------- Total Expenses before reimbursement 57,854 Reimbursed expenses (1,844) --------------------- Total Expenses 56,010 ------------------- Net Investment Income (Loss) 10,296 ------------------- Realized & Unrealized Gain (Loss) Net realized gain (loss) on investment securities 196,438 Change in net unrealized appreciation (depreciation) on investment securities 1,658,112 --------------------- Net gain (loss) on investment securities 1,854,550 ------------------- Net increase (decrease) in net assets resulting $ 1,864,846 =================== from operations
GLOBALT Growth Fund
Statement of Changes in Net Assets For the six months ended For the year ended April 30, 1998 October 31,1997 Increase in Net Assets Operations Net investment income $ 10,296 3,398 Net realized gain 196,438 659,135 Change in net unrealized appreciation 1,658,112 524,623 --------------- ------------------ Net Increase in net assets resulting from operations 1,864,846 1,187,156 --------------- ------------------ Distributions to shareholders: From net investment income (5,420) (2,033) From net realized gain (753,352) (52,184) --------------- ------------------ Total Distributions (758,772) (54,217) Share Transactions Net proceeds from sale of shares 2,033,840 3,528,668 Shares issued in reinvestment 758,703 54,217 Shares redeemed (782,627) (156,226) --------------- ------------------ Net increase in net assets resulting from share transactions 2,009,916 3,426,659 --------------- ------------------ Total increase in net assets 3,115,990 4,559,598 Net Assets Beginning of period 8,002,674 3,443,076 --------------- ------------------ End of period [including undistributed net investment income of $10,296 and $3,398, respectively] $ 11,118,664 $ 8,002,674 =============== ==================
GLOBALT Growth Fund For the year For the year For the period Financial Highlights ended ended ended April 30, 1998 October 31, 1997 to October 31, 1996 (b) Selected Per Share Data Net asset value, beginning of period $15.66 $12.48 $10.00 --------------- ---------------- --------------- Income from investment operations Net investment income 0.02 0.01 0.01 Net realized and unrealized gain (loss) 2.84 3.34 2.47 --------------- ---------------- --------------- Total from investment operations 2.86 3.35 2.48 --------------- ---------------- --------------- Less Distributions From net investment income (0.01) --------------- From net realized gain (1.39) (0.17) 0.00 --------------- ---------------- --------------- --------------- ---------------- Total distributions (1.40) (0.17) --------------- ---------------- Net asset value, end of period $17.12 $15.66 $12.48 Total Return 40.(a) 27.15% 27.(a) Ratios and Supplemental Data Net assets, end of period (000) $ 11,119 $8,003 $3,443 Ratio of expenses to average net assets 1.17(a) 1.17% 1.16(a) Ratio of expenses to average net assets before reimbursement 1.21(a) 1.19% 1.25(a) Ratio of net investment income to average net assets 0.21(a) 0.06% 0.11(a) Ratio of net investment income to average net assets before reimbursement 0.18(a) 0.04% 0.02(a) Portfolio turnover rate 77.02(a) 110.01% 66.42(a) Average commission rate 0.0600 0.0600 0.0740 (a) Annualized (b) For the period December 5, 1995 (commencement of operations.)
GLOBALT GROWTH FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 NOTE 1. ORGANIZATION The GLOBALT Growth Fund Inc. (the "Fund") is organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust"). The Trust is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company whose objective is to provide long term capital growth. 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 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. 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 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 instiutional-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 of Trustees. 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 April 30, 1998 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 an annual 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. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains GLOBALT , Inc. (the "Adviser") to manage the Fund's investments. The Adviser was organized as a Georgia Corporation in 1990. Angela Allen, President of the Adviser, and Samuel Allen, Chairman of the Adviser, are the controlling shareholders of GLOBALT, Inc. The investment decisions for the Fund are made by a committee of the Adviser, 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 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, taxes, interest fees and expenses of non-interested person trustees and extraordinary expenses. The Adviser is voluntarily reimbursing the Fund for trustees fees. There is no assurance that such reimbursement will continue in the future. 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 1.17% 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 Adviser. For the period from November 1, 1997 through April 30, 1998, the Adviser has received a fee of $56,010 from the Fund. 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 six months ended April 30, 1998, the Administrator received fees of $15,000 from the Adviser for administrative services provided to the fund. GLOBALT GROWTH FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 The fund retains AmeriPrime Financial Securities, Inc. (the Distributor) to act as the principal distributor of fund shares, there were not any payments made to the Distributor for the six month period ended April, 30, 1998. Certain members of management of the Administrator and the Distributor are also members of management of the AmeriPrime Trust. NOTE 4. CAPITAL SHARE TRANSACTIONS As of April 30, 1998 there was an unlimited number of no par value shares of capital stock authorized for the Fund. Paid in capital at April 30, 1998 was $8,517,890. Transactions in capital stock were as follows: For the six months For the six months For the year ended For the year ended ended April 30, ended April 30, October 31, 1997 October 31, 1997 1998 1998 Shares Dollars Shares Dollars Shares sold 131,279 2,033,840 241,426 $3,528,668 Shares issued in reinvestment of dividends 53,733 758,703 4,216 54,217 Shares redeemed (46,444) (782,627) (10,682) (156,226) -------- --------- -------- --------- 138,568 2,009,916 234,960 $3,426,659
NOTE 5. INVESTMENTS For the period from November 1, 1997 through April 30, 1998, purchases and sales of investment securities, other than short-term investments, aggregated $5,306,057 and $3,708,119, respectively. The gross unrealized appreciation for all securities totaled $2,508,959 and the gross unrealized depreciation for all securities totaled $18,043 for a net unrealized appreciation of $2,490,916. The aggregate cost of securities for federal income tax purposes at April 30, 1998 was $8,629,976. . 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. CARL DOMINO EQUITY INCOME FUND Schedule of Investments - (Unaudited) April 30, 1998 Common Stocks - 96.1% Shares Value Autos, Auto Parts - 2.6% Chrysler Corp. 1,635 $ 65,707 Tenneco, Inc. 2,300 99,044 ---------------- ---------------- 164,751 ---------------- Chemicals - 2.1% Witco Corp. 3,400 134,725 ---------------- Paper & Forest Products - 3.1% Union Camp Corp. 1,400 84,525 Weyerhaeuser Co. 2,000 115,250 ---------------- 199,775 ENERGY Oil & Gas - 12.0% MCN Energy Group Inc. 3,000 113,250 Midcoast Energy Resources 4,400 98,725 Mobil Corporation 700 55,300 Sonat Corporation 3,100 137,562 Sun Co., Inc. 2,500 101,094 USX Marathon Group 2,300 82,369 Williams Companies 1,600 50,600 YPF Sociedad Anonima 3,700 129,037 ---------------- 767,937 ---------------- Publishing - 1.7% Readers Digest Association 4,020 108,037 ---------------- Retail - 4.4% Intimate Brands 4,100 118,900 May Department Stores 900 55,519 Penney (J.C.) 1,500 106,594 ---------------- ---------------- 281,013 ---------------- Lodging, Restaurants, Leisure - 2.2% Patriot American Hospitality Inc. 5,480 138,370 ---------------- NON-DURABLES Cosmetics 4.5% Avon Products 1,820 149,581 International Flavors & Fragrances 2,800 137,025 ---------------- ---------------- 286,606 ---------------- Food - 3.3% General Mills 800 54,050 Heinz (H.J.) 1,800 98,100 Quaker Oats 1,200 62,400 ---------------- ---------------- 214,550 ---------------- Household Products - 3.8% Kimberly-Clark Group 2,400 121,800 Tupperware Corp. 4,500 121,781 ---------------- 243,581 ---------------- CARL DOMINO EQUITY INCOME FUND Schedule of Investments - (Unaudited)- April 30, 1998 - continued Common Stocks - continued Shares Value Tobacco - .6% Philip Morris 1,050 $ 39,178 ---------------- HEALTH Drugs - 5.5% American Home Products Corp. 1,400 130,375 Glaxo Wellcome PLC 1,800 101,813 Pharmacia & Upjohn Inc. 2,800 117,775 ---------------- ---------------- 349,963 ---------------- Diversified Medical - 1.2% Pall Corporation 4,000 78,500 ---------------- Health Care - 3.4% Baxter International Inc. 1,500 83,156 Oxford Health Plans (a) 8,000 137,000 ---------------- ---------------- 220,156 ---------------- Staples/Miscellaneous Services - 1.4% Deluxe Corporation 2,600 87,100 ---------------- Services/Miscellaneous - 6.1% Boron Lepour Associates (a) 1,000 37,500 DA Consulting Group (a) 1,000 17,625 Healthword Corp(a) 3,000 51,375 ISS Group, Inc (a) 500 22,125 Unisource Worldwide 9,000 114,187 Waste Management 4,500 150,750 ---------------- ---------------- 393,562 ---------------- Scientific -.3% Omega Protein Corp.(a) 1,000 17,500 ---------------- Technology- 4.2% Computer Assoc. Intl 2,000 117,125 Cotelliegent Group 1,000 25,813 Exodus Communication (a) 500 19,000 Hypercom Corp.(a) 8,000 104,000 ---------------- ---------------- 265,938 ---------------- Electrical Equipment - 1.8% Thomas & Betts 2,000 116,750 ---------------- Diversified Machinery - 3.2% Federal Signal Corp. 5,465 117,156 General Signal 2,000 88,000 ---------------- ---------------- 205,156 ---------------- CARL DOMINO EQUITY INCOME FUND Schedule of Investments - (Unaudited)- April 30, 1998 - continued Common Stocks - continued Shares Value Airlines, Truckers, & Railroads - 4.0% Knightsbridge Tankers Ltd. A 5,000 $ 143,750 Union Pacific Corp. 2,100 114,975 ---------------- ---------------- 258,725 ---------------- Photography/Office Equipment - 2.8% Eastman Kodak 1,050 75,797 Minnesota Mining & Manufacturing 1,100 103,812 ---------------- ---------------- 179,609 ---------------- Finance Major Regional & Other Banks - 6.0% Bankers Trust New York Corp. 1,000 129,125 Nations Bank Corp. 522 39,542 South Trust Corp. 1,650 70,435 Summitt Bancorp 2,900 145,362 ---------------- 384,464 ---------------- Finance - .9% Ocwen Asset Management (a) 3,000 55,125 ---------------- Utilities Electric Power Companies - 2.6% EDP Electricidate de Portugal ADR 1,000 52,000 Korea Electric Power Corp.-SP ADR 12,000 111,750 ---------------- ---------------- 163,750 ---------------- Natural Gas - 1.9% Atmos Energy Corp. 1,630 47,983 El Paso Natural Gas Company 2,054 75,870 ---------------- ---------------- 123,853 ---------------- Telephone Other - 7.3% AT&T Corp. 1,800 108,113 Amerilink Corp. (a) 2,000 46,250 China Telecomm (a) 2,000 77,250 Frontier Corp. 4,000 119,750 Telefonica de Argentina (a) 3,000 115,687 ---------------- 467,050 ---------------- REITs - 3.2% CCA Prison Realty Corp.(a) 2,000 70,875 Mid-America Apartment Communities Inc. 1,000 26,625 SL Green Realty Trust 4,500 108,000 ---------------- 205,500 ---------------- TOTAL COMMON STOCKS - 96.1% (Cost $5,254,164) 6,151,224 ---------------- Preferred Stock 1.7% Conseco Financial Preferred Series F (Cost $100,000) 2,000 109,125 ---------------- CARL DOMINO EQUITY INCOME FUND - continued Schedule of Investments - (Unaudited)- April 30, 1998 - continued Principal Amount Amount Money Market Securities - 2.2% Star Treasury 4.96% 12/31/98 (Cost $137,168) $ 137,168 $ 137,168 ---------------- TOTAL INVESTMENTS - 100.0% (Cost $ 5,491,332) 6,397,517 Other assets less liabilities 1,249 ---------------- TOTAL NET ASSETS - 100.00% 6,398,766 ---------------- (a) non-income producing
Carl Domino Equity Income Fund April 30, 1998 Statement of Assets & Liabilities (Unaudited) Assets Investment in securities, at value (cost $5,491,332) $ 6,397,517 Dividends receivable 8,060 Interest receivable 550 Reimbursement receivable 1,848 -------------------- Total assets 6,407,975 Liabilities Accrued investment advisory fee payable 7,469 Accrued trustees fees 1,740 ------------------- Total liabilities 9,209 -------------------- Net Assets $ 6,398,766 ==================== Net Assets consist of: Paid in capital $ 5,338,298 Accumulated undistributed net investment income 9,783 Accumulated undistributed net realized gain (loss) on investments 144,500 Net unrealized appreciation on investments 906,185 -------------------- Net Assets, for 375,589 shares $ 6,398,766 ==================== Net Asset Value Net Assets Offering price and redemption price per share ($6,398,766/375,589) $ 17.04 ====================
Carl Domino Equity Income Fund Statement of Operations (Unaudited) for the six months ended April 30, 1998 Investment Income Dividend income $ 63,785 Interest income 2,160 -------------------- Total Investment Income 65,945 Expenses Investment advisory fee $ 36,810 Trustees' fees 1,848 --------------- Total Expenses before Reimbursement 38,658 Reimbursed expenses (1,848) --------------- Total Operating Expenses 36,810 -------------------- Net Investment Income (Loss) 29,135 -------------------- Realized & Unrealized Gain (Loss) Net realized gain (loss) on investment transactions 162,111 Change in net unrealized appreciation (depreciation) on investment securities 386,688 --------------- Net gain (loss) on investment securities 548,799 -------------------- Net increase (decrease) in net assets resulting from operations $ 577,934 ====================
Carl Domino Equity Income Fund Statement of Changes in Net Assets (Unaudited) For the six For the year months ended ended April 30, 1998 October 31, 1997 Increase/(Decrease) in Net Assets Operations Net investment income $ 29,135 28,588 Net realized gain on investment transactions 162,111 224,774 Change in net unrealized appreciation 386,688 392,756 --------------- --------------- Net Increase in net assets resulting from operations 577,934 646,118 --------------- --------------- Distributions to shareholders: From net investment income (37,359) (11,997) From net realized gain (250,840) (10,581) --------------- --------------- --------------- --------------- Total distributions (288,199) (22,578) --------------- --------------- Capital Share Transactions Net proceeds from sale of shares 2,171,514 2,354,635 Shares issued in reinvestment of distributions 285,845 20,953 Shares redeemed (98,706) (371,396) --------------- --------------- Net increase in net assets resulting from share transactions 2,358,653 2,004,192 --------------- --------------- Total increase in net assets 2,648,388 2,627,732 Net Assets Beginning of period $ 3,750,378 $ 1,122,646 --------------- --------------- End of period [including undistributed net investment income of $7,935 and $28,588, respectively.] $ 6,398,766 $ 3,750,378 =============== ===============
Carl Domino Equity Income Fund Financial Highlights (Unaudited) For the six months For the year For the period ended April 30, ended October 31, ended October 31, Selected Per Share Data 1998 1997 1996 (b) Net asset value, end of period $16.15 $12.03 $10.00 -------------- -------------- -------------- Income from investment operations Net investment income 0.12 0.19 0.16 Net realized and unrealized gain (loss) 0.91 4.15 1.87 -------------- -------------- -------------- Total from investment operations 1.03 4.34 2.03 -------------- -------------- -------------- Less Distributions From net investment income (0.14) (0.22) - From net realized gain (0.94) - - -------------- -------------- -------------- -------------- Total distributions (1.08) (0.22) - -------------- -------------- -------------- Net asset value, end of period $17.04 $16.15 $12.03 Total Return 25.81(a) 36.58% 20.(a) Ratios and Supplemental Data Net assets, end of period (000) $6,399 $3,750 $1,122 Ratio of expenses to average net assets before expense reductions 1.57(a) 1.55% 1.73(a) Ratio of expenses to average net assets 1.50(a) 1.50% 1.51(a) Ratio of net investment income to average net assets before expense reductions 1.11(a) 1.22% 1.35(a) Ratio of net investment income to average net assets 1.18(a) 1.28% 1.57(a) Portfolio turnover rate 95.50% 52.49% 62.51(a) Average commission rate 0.0600 0.0585 0.0604 (a) Annualized (b) For the period November 6, 1995 (commencement of operations) to October 31, 1998
CARL DOMINO EQUITY INCOME FUND Notes to Financial Statements April 30, 1998 NOTE 1. ORGANIZATION The Carl Domino Equity Income Fund (the "Fund") was organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust"), on August 8, 1995, and commenced operations on November 6, 1995. The Trust is registered under the Investment Company Act of 1940, as amended, as a diversified series, open end management investment company. The investment objective of the fund is to provide long-term growth of capital together with current income. 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 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. 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 of Trustees. 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 April 30, 1998 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 an annual 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. 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, taxes, interest, fees and expenses of non-interested person trustees, and extraordinary expenses. The Adviser is voluntarily reimbursing the Fund for trustees fees. There is no assurance that such reimbursement will continue in the future. 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 period from November 1, 1997 through April 30, 1998, the Adviser received a fee of $36,810 from the Fund. CARL DOMINO EQUITY INCOME FUND Notes to Financial Statements April 30, 1998 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 six months ended April 30, 1998, the Administrator received fees of $15,000 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 not any payments made to the Distributor for the six month period ended April, 30, 1998. Certain members of management of the Administrator and the Distributor are also members of management of the AmeriPrime Trust. NOTE 4. CAPITAL SHARE TRANSACTIONS As of April 30, 1998 there was an unlimited number of no par value shares of capital stock authorized for the Fund. Paid in capital at April 30, 1998 was $5,338,298. Transactions in capital stock were as follows: For the six months For the six months For the year ended For the year ended ended ended October 31, 1997 October 31, 1997 April 30, 1998 April 30, 1998 Shares Dollars Shares Dollars Shares sold 130,912 $2,171,514 165,650 $2,354,635 Shares issued in reinvestment of dividends 18,442 285,845 1,664 20,953 Shares redeemed (6,015) (98,706) (28,359) (371,396) ------- -------- -------- --------- 143,339 $2,358,653 138,955 $2,004,192
CARL DOMINO EQUITY INCOME FUND Notes to Financial Statements April 30, 1998 NOTE 5. INVESTMENTS For the period from November 1, 1997 through April 30, 1998, purchases and sales of investment securities, other than short-term investments, aggregated $3,212,018 and $2,110,635, respectively. The gross unrealized appreciation for all securities totaled $1,003,090 and the gross unrealized depreciation for all securities totaled $96,905 for a net unrealized appreciation of $906,185. The aggregate cost of securities for federal income tax purposes at April 30, 1998 was $6,397,517. 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 April 30, 1998, Carl Domino Associates, L.P., and entities which the Adviser could be deemed to control or have discretion over owned in aggregate more than 25% of the Fund. AIT Vision Fund Investment Results - For the Period Ended April 30, 1997 Dear Fellow Shareholders: Since the October 31, 1996 fiscal year end, the AIT Vision Fund appreciated 3.9% for the six months ended April 30, 1997. According to Lipper Analytical Services, Inc. the average return during this six month period for a peer group of 799 growth funds was 7.2%. The unmanaged S&P 500 and Russell 3000 indices advanced 14.7% and 11.9%, respectively, during the same six month period. Comparative investment results are displayed below.
- ------------------------------------------------ - ----- ------------------- ------- ----------------- Returns for the Periods Ended 4/30/97 - ------------------------------------------------ - ----- ------------------- ------- ----------------- Since Inception Average Fund/Index 1 Year 12/28/95 Annual - ---------- ------ -------- ------ AIT Vision Fund 18.2% 31.2% 22.4% S&P 500 25.1% 34.1% 24.4% Russell 3000 20.0% 29.4% 21.1% - ------------------------------ -------- ---------------- ------------------- ------- -----------------
Comparison of the Change in Value of a $10,000 Investment in AIT Vision Fund, the Unmanaged S&P 500 Index, and the Unmanaged Russell 3000 Index CHART This chart shows the value of a hypothetical initial investment of $10,000 in the Fund, the S&P 500 Index, and the Russell 3000 Index on December 28, 1995 and held through April 30, 1997. The S&P 500 Index and the Russell 3000 Index are 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. Commentary - "Vuja De: the distinct feeling that you have never seen anything like this before" Those investors who may have been lulled into complacency by the U.S. market's steady, unwavering upward climb have certainly been awakened by the market's gyrations during the last six to twelve months. What a ride it has been: the market peaked in June 1996 and promptly bottomed within the subsequent month, then rapidly rose to another peak in February 1997 only to dramatically rebound from a sell off and extreme bearishness during April 1997. This April 1997 rebound has extended its gains to date and continues to defy the well documented warnings of Alan Greenspan, Warren Buffet, and most of the "talking heads" on the financial networks. These commentators either proclaim the market's impending collapse based upon time tested valuation measures or they declare that things are different this time, a sense of "vuja de" which is the distinct feeling that one has never experienced anything quite like this before (the opposite of the well known deja vu). During this period of heightened volatility, pockets of extreme return differences have emerged within the broad market. The table below details two of these extreme differences that have directly impacted the performance of the AIT Vision Fund. - ----------------------------------------------------------------------------- Comparative Index Returns for the Period Ended 4/30/97 - ----------------------------------------------------------------------------- Index/Characteristic 6 Months 1 Year - -------------------- -------- ------ Russell 1000 (Largecap Stocks) 13.1% 22.4% Russell 800* (Midcap Stocks) 6.7% 10.9% Russell 2000 (Smallcap Stocks) 1.6% 0.1% Largecap less Smallcap 11.5% 22.3% Russell Midcap Value Stocks 10.3% 3.9% Midcap Value less Midcap Growth 7.5% 13.8% - ---------------------------------------------- --------------- -------------- * Subset of the Russell 1000. The quantitative investment strategy followed by the AIT Vision Fund has led us to typically hold positions which are not highly concentrated among the largest capitalization nor the smallest capitalization companies, but instead looks for stocks with steady earnings growth prospects regardless of company size. These general tendencies have been extremely out of favor recently within the broad market. As of April 30, 1997, the trailing one year return difference between largecap and smallcap stocks of 22.3% is the single largest one year difference since 1979! Unless you have owned the largest companies in the market (e.g., General Electric, Coca Cola, Exxon), you have struggled as an investor to keep pace. This largecap outperformance has been partly the result of investors pouring money into the market at record levels with a preference for safer, more liquid stocks. Thus as we spread the AIT Vision Fund's holdings over a universe of about 3,000 stocks, the narrowness of the market's leadership has worked against performance. Furthermore, if you combined diversified capitalization holdings with a growth stock emphasis, you have recently compounded your pain and performance struggles. As of April 30, 1997, the trailing one year outperformance of midcap value over midcap growth stocks of 13.8% is the second largest such difference since 1981. Therefore, given the extreme uncommon performance differences within the recent market, no wonder some commentators are proclaiming that things are different this time. Outlook So which will it be? Will the traditional valuation arguments for overvaluation hold or is the present environment entirely different from the past? Our belief is best summarized by Mark Twain who said, "The past doesn't repeat itself, but it sure does rhyme." To us this means that an investor must study the market's past behavior and be intelligent in employing a discipline based upon sound economic and financial analysis which adapts to the natural evolution of market forces. Looking forward, our belief is that market returns will gradually broaden into the smaller company stocks; and, due to the gradual deceleration of the U.S. economy, companies which can deliver earnings growth independent of a slowing business cycle will be rewarded. Therefore, we believe that the typical biases of the AIT Vision Fund position it to benefit from these trends as they develop in the future. Listed below are the top holdings of the AIT Vision Fund as of April 30, 1997. - --------------------------------------------------- -------------------- - Ten Largest Holdings - --------------------------------------------------- -------------------- - Percent of Net Assets 4/30/97 Walt Disney 3.49% United Airlines 3.39% Circuit City Stores 3.27% Microsoft 3.12% Cigna 3.00% Enron Oil and Gas 2.92% United Healthcare 2.91% Georgia-Pacific 2.89% Conseco 2.83% Temple Inland 2.69% ----- Total 30.51% - ------------------------------------ ----------------------- ------------------ Thank you for your trust and continued confidence. Respectfully, Douglas W. Case, CFA Managing Director of Portfolio Management Advanced Investment Technology, Inc.
AIT Vision U.S. Equity Portfolio Schedule of Investments April 30, 1997 (Unaudited) Common Stock - 98.4% Shares Value Apparel - 1.3% TJX Companies Inc. 1,000 47,250 ----------------- Banks - 2.0% Northern Trust Corp. 1,700 75,650 ----------------- Chemicals - 2.5% Rohm & Hass & Co. 1,100 91,575 ----------------- Communications & Communications Equipment - 9.5% Bell South Corp. 900 40,050 Century Telecommunications 2,200 65,725 Cincinnati Bell 1,600 89,600 Clear Channel Communications 900 43,650 Gentex Corp. 1,700 30,600 Worldcom Inc. 3,500 84,000 ----------------- 353,625 ----------------- Computers, Periphals & Software- 16.3% Adobe Systems Inc. 2,000 78,250 Cisco Systems Inc. 1,800 93,150 Comdisco Inc. 1,100 34,925 Computer Associates International 1,700 88,400 Dell Computer 700 58,581 EMC Corp. 1,400 50,925 Intel Corp. 600 91,875 Microsoft Corp. 900 109,350 ----------------- 605,456 ----------------- Computer Office Equipment - 1.1% Black & Decker Corp. 1,200 40,200 ----------------- Cosmetics - 2.5% Colgate Palmolive 500 55,500 Proctor & Gamble Co. 300 37,725 ----------------- 93,225 ----------------- Drugs - 6.6% Abbott Labs 700 42,700 Bristol Myers Squibb 1,000 65,500 Johnson & Johnson 900 55,125 Merck & Co. Inc. 700 63,350 Pfizer Inc. 200 19,200 ----------------- 245,875 ----------------- Electric Utilities - 1.1% Union Electric Co. 1,200 42,750 ----------------- Energy - Oil & Gas - 6.1% Anadarkko Petroleum Corp. 1,400 76,825 Enron Oil & Gas Co. 5,500 102,438 Ensco International Inc 1,000 47,500 ----------------- 226,763 ----------------- AIT Vision U.S. Equity Portfolio - continued Common Stocks - continued Financial Services - 1.8% Shares Value Charles Schwab Corp. 1,800 65,925 ----------------- Food - 3.8% Coca Cola Enterprises Inc. 1,600 96,600 Pepsico Inc. 1,300 45,338 ----------------- 141,938 ----------------- Healthcare - 5.2% Healthsouth Rehabilitation Corp. 4,600 90,850 United Healthcare 2,100 102,112 ----------------- 192,962 ----------------- Holding Companies - 3.0% McDermott International Inc. 2,000 37,000 Nipsco Industrial Inc. 1,000 39,500 Southern Co. 1,800 36,675 ----------------- 113,175 ----------------- Industrial Machinery & Equipment - 1.5% U.S. Filter Corp. 1,900 57,713 ----------------- Insurance - 8.7% Cigna Corp. 700 105,263 Conseco Inc. 2,400 99,300 Travelers Group 1,000 55,375 Washington Mutual Inc. 1,300 64,187 ----------------- 324,125 ----------------- Grocery - 1.7% Safeway Inc. 1,425 63,591 ----------------- Hotels/Restaurants - 1.8% Hilton Hotels Corp. 2,500 67,500 ----------------- Paper & Paper Products - 5.3% Georgia Pacific Corp. 1,300 101,400 Temple Inland Inc. 1,700 94,350 ----------------- 195,750 ----------------- Railroad - 1.6% St. Joe Corp. 800 58,100 ----------------- Retail - 8.5% American Stores Co. 1,300 59,150 Circuit City Stores Inc. 2,900 114,912 Dillard Department Stores Class A 3,000 92,625 GAP Inc. 1,500 47,812 ----------------- 314,499 ----------------- Television, Video Production - 3.3% Disney (Walt) Co. 1,500 123,000 ----------------- Transportation - 3.2% UAL Corp. 1,600 119,000 ----------------- TOTAL COMMON STOCKS (Cost $3,590,933) $3,659,647 ----------------- AIT Vision U.S. Equity Portfolio - continued Money Market Securities - 1.6% Principal Amount Star Treasury 4.160%, 12/31/97 $59,597 $59,596 ----------------- Total Bonds & Notes (Cost $59,597) TOTAL INVESTMENTS - 100.0% Cost $3,650,529 $3,719,243 ----------------- Other Assets less liabilities - 0.0% (364) ----------------- TOTAL NET ASSETS - 100% $3,718,879 =================
AIT Vision U.S. Equity Portfolio April 30,1997 Statement of Assets and Liabilities (Unaudited) Assets Investment in securities, at value (cost $3,650,529) $ 3,719,243 Reveivable for securities sold 73,920 Dividends receivable 3,438 Interest receivable 157 Receivable from advisor for trustees fees 876 ------------------ Total assets 3,797,634 Liabilities Accrued advisory fee $ 76,152 Accrued trustees' fees 2,061 Other payables and accrued expenses 542 ----------------- Total liabilities 78,755 ------------------ Net Assets 3,718,879 ================== Net Assets consist of: Paid in capital $ 3,725,810 Undistributed net investment income (loss) 4,259 Undistributed net realized gain (loss) (79,904) Net unrealized appreciation (depreciation) on investments 68,714 ------------------ Net Assets, for 323,716 shares 3,718,879 ================== Net Asset Value Net Assets Offering price and redemption price per share ($3,718,879/323,716) $ 11.49 ==================
AIT Vision U.S. Equity Portfolio Statement of Operations for the Six month period ended April 30, 1997 (Unaudited) Investment Income Dividend Income $ 9,114 Interest Income 159 ------------------ Total Income 9,273 Expenses Investment advisory fee $ 5,013 Trustee's fees 876 ------------------ Total Expenses before reimbursement 5,889 Reimbursed trustees fees (876) ------------------ Total operating expenses 5,013 ------------------ Net Investment Income (Loss) 4,259 ------------------ Realized & Unrealized Gain (Loss) Net realized gain (loss) on investment securities (81,056) Change in net unrealized appreciation (depreciation) on investment securities 34,579 ------------------ ------------------ Net gain (loss) (46,477) ------------------ Net increase (decrease) in net assets resulting $ (42,218) ================== from operations
AIT Vision U.S. Equity Portfolio Statement of Changes (Unaudited) November 6, 1995 For the six months (commencement of ended April 30, operations) to October 31, Increase/(Decrease) in Net Assets 1997 1996 Operations Net investment income (loss) $ 4,259 $ (2,866) Net realized gain (loss) (81,056) 82,838 Change in net unrealized appreciation (depreciation) 34,579 34,135 --------------- -------------- Net Increase (decrease) in net assets resulting from operations (42,218) 114,107 --------------- -------------- Distributions to shareholders: From net investment income 0 0 From net realized gain (81,686) 0 --------------- -------------- Total distributions (81,686) Share Transactions Net proceeds from sale of shares 3,152,207 536,013 Shares issued in reinvestment 81,686 0 Shares redeemed (18,269) (47,961) --------------- -------------- Net increase (decrease) in net assets resulting from share transactions 3,215,624 488,052 --------------- -------------- Total increase (decrease) in net assets 3,091,720 602,159 Net Assets Begining of period $ 627,159 $ 25,000 --------------- -------------- End of period including undistributed net investment income(loss) of $4,259 and $(2,866) $ 3,718,879 $ 627,159 =============== ==============
Financial Highlights (Unaudited) November 6, 1995 For the six months (commencement of Selected Per Share Data ended April 30, operations) to October 31, 1997 1996 Net asset value, begining of period $12.62 $10.00 -------------- -------------- Income from investment Operations Net investment income 0.03 (0.07) Net realized and unrealized gain (loss) 0.44 2.69 -------------- -------------- Total from investment operations 0.47 2.62 Less Distributions From net investment income (1.60) 0.00 -------------- -------------- Net asset value, end of period $11.49 $12.62 ============== ============== Total Return (a) -(18.05)% 31.03% Ratios and Supplemental Data Net assets, end of period (000) $3,719 $627 Ratio of expenses to average net assets (a) 0.69% 1.87% Ratio of expenses to average net assets before reimbursement (a) 0.81% 1.87% Ratio of net investment income to average net assets (a) 0.58% -0.70% Ratio of net investment income to average net assets before reimbursement (a) 0.46% Portfolio turnover rate (a) 179.07% 238.63% Average commission rate 0.041 0.0471 (a) Annualized
AIT VISION U.S. EQUITY PORTFOLIO Notes to Financial Statements April 30, 1997 1. ORGANIZATION The AIT Vision U.S. Equity Portfolio (the "Fund") was organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust"), on August 8, 1995, and commenced operations on November 6, 1995. The Trust is registered under the Investment Company Act of 1940, as amended, as a diversified series, open end management investment company. The Trust Agreement permits the Trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. 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. 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 of Trustees. 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. 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 an annual 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. AIT VISION U.S. EQUITY PORTFOLIO Notes to Financial Statements April 30, 1997 NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains Advanced Investment Technology, Inc. (the "Adviser") to manage the Fund's investments. Dean S. Barr is a controlling shareholder of the Adviser. Douglas W. Case, CFA, Director of Equity Portfolio Management, Dean S. Barr, Chairman and Chief Investment Officer, and Susan L. Reigel, Portfolio Management, are primarily responsible for the day to day management of the Fund's portfolio. Prior to October 29, 1996, the Fund was managed by LBS Capital Management, Inc. 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, 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 computed and accrued daily and paid monthly at an annual rate of 0.70% 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 November 1, 1996 through April 30, 1997, the Adviser has received a fee of $5,013 from the Fund. NOTE 4. CAPITAL SHARE TRANSACTIONS As of April 30, 1997 there was an unlimited number of no par value shares of capital stock authorized for the Fund. Paid in capital at April 30, 1997 was $3,728,676. Transactions in capital stock were as follows:
For the period from For the period November 6, 1995 from November 6, (Commencement of 1995 (Commencement Operations) through of Operations) For the six month For the six month October 31, 1997 through October period ended April period ended April 31, 1997 30, 1997 30, 1997 Shares Dollars Shares Dollars Shares sold 268,461 $3,152,207 51,315 $536,013 Shares issued in reinvestment of dividends 7,210 81,686 0 0 Shares redeemed (1,648) (18,269) (4,122) (47,961) ------- -------- ------- -------- 274,023 $3,215,624 47,193 $488,052
NOTE 5. INVESTMENTS For the period from November 1, 1996 through April 30, 1997, purchases and sales of investment securities, other than short-term investments, aggregated $5,354,480 and $2,256,474 respectively. The gross unrealized appreciation for all securities totaled $68,714 and the gross unrealized depreciation for all securities totaled $153,022 for a net unrealized appreciation of $84,308. The aggregate cost of securities for federal income tax purposes at April 30, 1997 was $3,650,529. AIT VISION U.S. EQUITY PORTFOLIO Notes to Financial Statements April 30, 1997 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 April 30, 1997, LBS Capital Management Inc., and entities which the Adviser could be deemed to control or have discretion over owned in aggregate more than 25% of the Fund. New Cap Contrarian Fund Schedule of Investments - (Unaudited)- April 30, 1998 Common Stock - 107.0% Shares Value Auto Parts & Products - 10.4% Boston Acoustics Inc. 1,000 $ 31,625 Chicago Rivets & Machine Co. 1,800 65,250 Johnson Controls Inc. 1,000 59,375 ------------------ ------------------ 156,250 ------------------ Communications - 1.5% Davox Corp (a) 1,000 22,375 ------------------ Computer Services & Software - 1.1% 3Com* (a) 500 17,125 ------------------ Financial Services - .7% J W Charles Financial Services (a) 800 9,900 ------------------ Industrial Machinery & Equipment - 10.8% Carlisle Cos. Inc. 1,000 50,750 Gardner Denver Machinery Inc. (a) 1,500 42,281 Moore Products Co. 1,000 35,000 Newport Corp 1,400 28,525 Zygo Corp.(a) 300 6,375 ------------------ 162,931 ------------------ Industrial Products - 1.3% Deswell Industries, Inc. 1,000 19,875 ------------------ Industrial Services - 8.1% Kaydon Corp. 2,800 122,675 ------------------ Insurance - 10.6% CorVel Corp.(a) 1,000 35,625 Sun America Inc. 2,500 124,844 ------------------ 160,469 ------------------ Medical Services - 1.8% Dionex Corp. (a) 500 26,688 ------------------ Medical Supplies & Equipment -5.2% PSS World Medical Inc. (a) 3,500 78,531 ------------------ Metal Recycling Services - 1.7% Metal Management Inc.(a) 2,000 25,875 ------------------ New Cap Contrarian Fund Schedule of Investments -(Unaudited)- April 30, 1998 - continued Common Stock - continued Shares Value Non-Precious Metals Mining - Exploration - 2.5% Adrian Resources Ltd. (Panama) (a) 10,000 $ 6,250 Consolidated Magna Ventures Ltd. (Canada) 45,500 12,724 Farrallon Resources Ltd. 6,000 18,037 ------------------ 37,011 ------------------ Precious Metals Mining - Exploration - 12.9% Brandon Gold Corp. 38,800 26,583 Manhattan Minerals Corp. 12,500 34,956 Nevsun Resources (Ghana, Mali) 55,400 115,031 Oliver Gold Corp. (Mali, Zimbabwe) 98,600 17,922 ------------------ 194,492 ------------------ Precious Metals Mining - Producing - 21.5% Bema Gold Corp. (Chile) (a) 3,000 7,500 Banro Resource Corp. (Zaire) 16,000 68,513 Crystallex International Corp. (a) 60,000 247,500 ------------------ ------------------ 323,513 ------------------ Oil & Oilfield Services - 5.2% Arakis Energy Corp. (a) 10,000 17,500 World Fuel Services Corp. 3,000 60,563 ------------------ ------------------ 78,063 ------------------ Retail - 11.7% Paul Harris Stores (a) 3,000 44,813 Pier One Imports Inc. 4,500 118,687 Stride Rite Corp. 1,000 12,562 ------------------ 176,062 ------------------ TOTAL COMMON STOCKS 107.0% (Cost $1,894,149) 1,611,835 ------------------ OPTIONS - Short Options - Description Strike Price Expiration Contracts Dionex Corp. 60 Jul. 1998 5 1,281 Sun America, Inc. 60 Dec. 1998 17 4,038 ------------------ TOTAL OPTIONS - (0.3%) (Cost $7,541) (5,319) ------------------ TOTAL INVESTMENTS - 106.7% (Cost $1,886,608) $ 1,606,516 Liabilities less other assets - (6.7%) (100,498) ------------------ TOTAL NET ASSETS - 100.0% $ 1,506,018 ================== Legend (a) non-income producing
New Cap Contrarian Fund April 30, 1998 Statement of Assets & Liabilities Assets Investment in securities, at value (cost $1,886,608) $ 1,606,516 --------------------- Liabilities Payable to custodian bank 93,902 Accrued advisory fee 3,184 Accrued trustees' fees 689 Accrued distribution fees 2,708 Other payables and accrued expenses 15 ------------------ Total liabilities 100,498 --------------------- Net Assets $ 1,506,018 ===================== Net Assets consist of: Paid in capital $ 1,806,914 Accumulated undistributed net investment income(loss) (63,162) Accumulated undistributed net realized gain(loss) 42,358 Net unrealized (depreciation) on investments (280,092) --------------------- Net Assets, for 182,813 shares $ 1,506,018 ===================== Net Asset Value Net Assets Offering price and redemption price per share ($1,506,018/182,813) $ 8.24 =====================
New Cap Contrarian Fund Statement of Operations for the six months ended April 30, 1998 Investment Income Dividend Income $ 2,592 Interest Income 431 ----------------- Total Income 3,023 Expenses Management fee $ 19,092 12-B1 fees 1,909 Trustees' fees 635 ----------------- Total Expenses 21,636 ----------------- Net Investment Income (Loss) (18,613) ----------------- Realized & Unrealized Gain (Loss) Net realized gain (loss) on investment securities 8,013 Net realized gain (loss) on options transactions 0 Change in net unrealized appreciation (depreciation) on investment securities (55,137) ----------------- Net gain (loss) (47,124) ----------------- Net increase (decrease) in net assets resulting from operations $ (65,737) =================
New Cap Contrarian Fund Statement of Changes in Net Assets (Unaudited) For the six For the year months ended ended Increase/(Decrease) in Net Assets April 30, 1998 October 31, 1997 Operations Net investment income (loss) $ (18,613) (44,549) Net realized gain (loss) on securities transactions 8,013 171,581 Net realized gain (loss) on options transactions - (75,762) Change in net unrealized appreciation (depreciation) (55,137) (177,571) --------------- ------------------ Net Increase (decrease) in net assets resulting from operations (65,737) (126,301) --------------- ------------------ Distributions to shareholders: From net investment income - - From net capital gains (38,200) - --------------- ------------------ Total distributions (38,200) - --------------- ------------------ Share Transactions Net proceeds from sale of shares 56,807 762,466 Shares issued in reinvestment 38,200 - Shares redeemed (167,150) (461,769) --------------- ------------------ Net increase (decrease) in net assets resulting from share transactions (72,143) 300,697 --------------- ------------------ Total increase (decrease) in net assets (176,080) 174,396 Net Assets Beginning of period 1,682,098 1,507,702 --------------- ------------------ End of period [including net investment income (loss) of of $(44,549) and $(5,245), respectively] $ 1,506,018 $ 1,682,098 =============== ==================
New Cap Contrarian Fund Financial Highlights For the six months ended For the year ended For the period ended Selected Per Share Data April 30, 1998 October 31, 1997 October 31, 1996 (b) Net asset value, $8.74 $9.21 $10.00 --------------- ------------- ------------- begining of period Income from investment operations Net investment income (0.10) (0.22) (0.05) Net realized and unrealized gain (loss) (0.33) (0.23) (0.74) --------------- ------------- ------------- Total from investment operations (0.43) (0.45) (0.79) --------------- ------------- ------------- Less Distributions From net interest income - - - From net capital gain (0.07) - - --------------- ------------- ------------- Total distributions (0.07) - - --------------- ------------- ------------- Net asset value, end of period $8.24 $8.76 $9.21 Total Return (6.63%(a) (4.89)% (15.80)(a)% Ratios and Supplemental Data Net assets, end of period (000) $1,506 $1,682 $1,508 Ratio of expenses to average net assets 2.83%(a) 2.83% 2.89(a) Ratio of net investment income to average net assets (2.44)%(a) (2.56)% -1.16(a) Portfolio turnover rate 71%(a) 146% 92%(a) Average commission rate 0.0279 0.0375 0.0497 (a) Annualized (b) May 2, 1996 (commencement of operations) to October 31, 1996.
NEW CAP CONTRARIAN FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 1. ORGANIZATION The New Cap Contrarian Fund (the "Fund") was organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust"), on December 26, 1995 and commenced operations on May 2, 1996. The Trust is registered under the Investment Company Act of 1940, as amended, as a non-diversified, open-end management investment company. The investment objective of the fund is provide maximum long term growth. The Trust Agreement permits the trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. 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 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. 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 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 Adviser, subject to review of the Board of Trustees. 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. NEW CAP CONTRARIAN FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 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. However, for the taxable year ended October 31, 1996 the Fund did not qualify to be taxed as a "regulated investment company" for federal income tax purposes. The Fund intends to qualify as a "regulated investment company" in subsequent years. This non-qualification had no effect on net asset value or tax owed by the Fund. Dividends and Distributions- The Fund intends to distribute substantially all of its net investment income as dividends to its shareholders on an annual 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. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains Newport Investment Advisors, Inc. (the "Adviser") to manage the Fund's investments. Kenneth M. Holeski, president and controlling shareholder 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 12b-1 fees, brokerage, 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 computed and accrued daily and paid monthly at an annual rate of 2.50% 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 November 1, 1997 through April 30, 1998, the Adviser received a fee of $19,092 from the Fund. NEW CAP CONTRARIAN FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 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 six months ended April 30, 1998, the Administrator received fees of $15,000 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 not any payments made to the Distributor for the six month period ended April, 30, 1998. Certain members of management of the Administrator and the Distributor are also members of management of the AmeriPrime Trust. NOTE 4. CAPITAL SHARE TRANSACTIONS As of April 30, 1998 there was an unlimited number of no par value shares of capital stock authorized for the Fund. Paid in capital at April 30, 1998 was $1,806,914. Transactions in capital stock were as follows: For the six For the six months For the year ended For the year ended months ended ended October 31, 1997 October 31, 1997 April 30, 1998 April 30, 1998 Shares Dollars Shares Dollars Shares sold 7,565 $56,807 82,953 $762,422 Shares issued in reinvestment of dividends 5,107 38,200 0 0 Shares redeemed (21,883) (167,150) (54,641) (461,769) -------- --------- -------- --------- (9,211) $(72,143) 28,312 $300,697
NOTE 5. INVESTMENTS For the period from November 1, 1997 (commencement of operations) through April 30,1998 , purchases and sales of investment securities, other than short-term investments, aggregated $546,739 and $557,158, respectively. The gross unrealized appreciation for all securities totaled $267,060 and the gross unrealized depreciation for all securities totaled $547,152 for a net unrealized depreciation of $280,092. The aggregate cost of securities for federal income tax purposes at April 30, 1998 was $1,886,608. As of April 30, 1998 the Fund has invested 38.7% of its net assets in foreign securities. 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. NEW CAP CONTRARIAN FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 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 April 30,1998, Cheryl Holeski (wife of the President and controlling shareholder of Newport Investment Advisor) owns more than 25% of the fund. Dear Fellow Shareholders, Human nature often runs counter to common sense. While impatience can be a catalyst for change and progress, it can also be the main culprit in many of life's mistakes. Consider this common example: A man is standing in line at the grocery store with a gallon of milk. He's chosen the express line since he has saved time by doing so in the past. After barely moving for five minutes he notices a lady with five bags of groceries heading to her car. He recalls that she was still shopping when he entered the express line. After several more minutes with little progress, he abandons his express line and heads for what appears to be a faster checker. As he now stands in his new, slower line his frustration escalates while watching the folks previously behind him in the express line head for their cars, groceries in hand. Obviously in hindsight, the man's impatience caused him to make a poor decision at the worst possible time. It is this same impatience that can cause an investor to sell a lagging stock just before it doubles in price. Similarly, mutual fund investors may be tempted to chase returns, in other words, reverse a good decision in order to chase what appears to be a better return at the moment. It is important to be aware of this basic human tendency. In our last annual report, we pointed out the ups and downs that should be expected with our concentrated, yet diversified approach. We emphasized how undervalued our portfolio was compared to the overall market and how well our fund held up on the days when the market took its worst beatings. Finally we noted that our style, while historically successful, had recently produced some disappointing performance, which we viewed as a buying opportunity and recommended that investors do the same. Kudos to those who did. "Buying on dips" takes discipline and is never easy, yet the strategy seems to consistently reward investors over time. In the six months since our last writing, shares in the IMS Capital Value Fund have increased by 12.87% (+25.74% annualized). With a diversified portfolio of thirty to thirty-five, hand-picked companies, our results tend to be determined more by the performance of our largest holdings than by the direction of the overall market. Several of the undervalued and largely undiscovered gems in our portfolio have been starting to get noticed. Rubbermaid, our largest holding at 7% of fund assets, gained over 20% during the period, including dividends, as it reported earnings that exceeded Wall Street's expectations. Other top performers among our ten largest holdings included Fruit of the Loom, up 42%, which surprised the analysts with earnings that nearly doubled their expectations; Waste Management, rose 43% as it announced a well-received merger with USA Waste, giving the company access to one of the top C.E.O.'s in the business; Office Depot, up 60% on strong earnings growth; and U.S. West Media, up 50% on a general resurgence of the cable industry after Microsoft's $1 billion investment and extremely positive operating results. Conversely, Sunbeam, after a strategic acquisition of Coleman, First Alert and the maker of Mr. Coffee, surprised everyone with very disappointing earnings as the stock got clobbered, dropping from $45 to $25. For investors who purchased shares at the fund's inception in August of 1996, your investment adjusted for dividends and capital gains has gained 36.12% or 19.46% on an annualized basis. The fund has returned 19.83% to shareholders over the last 12 months. We continue to search out quality companies trading at historically low valuations based on their fundamentals: Price-to-book, price-to-earnings, price-to-sales and price-to-cash flow. We look for globally-diversified companies with good business characteristics that have been out of favor with investors for quite some time. We analyze twenty-eight aspects of the company using our valuation model and assign a score based on the results. If we determine that a company is a candidate for ownership, we then wait for the company to exhibit some concrete signs that a turn around is indeed underway. By owning a diversified collection of undervalued, blue chip stocks with the above characteristics, we believe the fund provides shareholders with a lower level of risk than many other, more aggressive investment styles. Runaway bull markets can have some very strange side effects. They can make some very smart managers look a bit boring and they have a way of making lucky speculators look smart. The term "bull market genius" comes to mind. These are the folks who've seen a couple of their stocks double in the last two years and are now ready to start telling you what to do with your money. We've also seen some well-known value managers throw in the towel and start chasing over-priced growth stocks such as Coke, Gillette and Microsoft. Although the market may be trading at record highs, the companies in your fund's portfolio are still very reasonably priced. While the S & P 500 trades at roughly six times book value, the IMS Capital Value Fund trades at just three times book. Be assured that our convictions remain strong. We will not be drawn into the fray of frothy and excessive valuations, rather, we will continue striving to both grow and protect our shareholders assets. Thank you for joining all of us at IMS Capital Management as shareholders in the fund. We are working diligently towards our goal of making the IMS Capital Value Fund one of the most respected and successful value funds in the industry. Carl W. Marker Douglas E. Johanson, C.F.A Portfolio Manager Research Analyst IMS Capital Value Fund Schedule of Investments - (Unaudited) April 30, 1998
Common Stocks - 94.7% Shares Value Apparel - 5.5% Fruit of the Loom (a) 17,000 $ 635,375 Nike Inc. (Class B) 1,000 47,750 -------------------- -------------------- 683,125 -------------------- Cable TV & Equipment - 7.4% General Instrument Corp. 19,000 426,313 U.S. West Media Group (a) 13,000 490,750 -------------------- -------------------- 917,063 -------------------- Communications - 5.0% Paging Network Inc. 24,000 337,500 Motorola Inc. 5,000 278,125 -------------------- -------------------- 615,625 -------------------- Computer & Related Technologies - 12.8% Electronic Data Systems 16,000 688,000 Intel Corp. 4,000 323,250 Novell, Inc.(a) 27,000 270,000 Symantec Corp. 10,000 290,000 -------------------- -------------------- 1,571,250 -------------------- Computers & Peripherals - 2.6% American Power Conversion (a) 10,000 321,875 -------------------- Environmental - 5.2% Waste Management Inc. 19,000 636,500 -------------------- Food & Tobacco - 3.8% RJR Nabisco Holdings Corp. 17,000 472,812 -------------------- Food Distribution - 2.3% Fleming Companies 15,000 281,250 -------------------- Other Services - 5.4% H & R Block 7,400 333,000 Olsten Corp. 24,000 328,500 -------------------- -------------------- 661,500 -------------------- Healthcare Products - 6.0% Bausch & Lomb 7,500 370,781 IVAX Corp. (a) 38,000 370,500 -------------------- -------------------- 741,281 -------------------- Other Consumer Goods Services - 8.8% Singer Co. 25,000 242,188 Shaw Industries, Inc. 28,000 453,250 Toy Biz (a) 37,000 386,187 -------------------- -------------------- 1,081,625 -------------------- IMS Capital Value Fund Schedule of Investments - (Unaudited) April 30, 1998 - continued Common Stocks - continued Hospitals & Managed Care - 4.9% Shares Value PacifiCare Health Systems, Inc. (Class A) (a) 4,500 $ 316,125 Foundation Health Systems (a) 10,000 289,375 -------------------- -------------------- 605,500 -------------------- Household Products - 8.9% Sunbeam Corp. 13,000 326,625 Rubbermaid Inc. 27,000 772,875 -------------------- -------------------- 1,099,500 -------------------- Insurance - 2.8% Conseco Inc. 7,000 347,375 -------------------- Energy - 2.8% YPF S.A. Sponsored ADR (a) 10,000 348,750 -------------------- Retail - 7.6% PETsMART, Inc. (a) 37,000 434,750 Office Depot Inc. (a) 15,000 496,875 -------------------- 931,625 -------------------- Utilities - 2.9% Niagra Mohawk Power(a) 14,000 171,500 Texas Utilities Co. 4,500 180,000 -------------------- -------------------- 351,500 -------------------- TOTAL COMMON STOCKS (Cost $ 9,957,310) $ 11,668,156 ==================== Money Market Securities - 5.3% Star Treasury 4.61%, 12/31/98 (Cost $ 648,159) 648,159 -------------------- TOTAL INVESTMENTS - 100.0% (Cost $ 10,605,469) 12,316,315 Other assets less liabilities 2,310 -------------------- TOTAL NET ASSETS - 100% $ 12,318,625 ==================== (a) non-income producing
IMS Capital Value Fund Statement of Assets & Liabilities (Unaudited) April 30, 1998 Assets Investment in securities, at value (cost $10,605,469) $ 12,316,315 Interest receivable 441 Deferred Organizational Costs 20,214 ---------------------- Total assets 12,336,970 Liabilities Redemptions payable 1,931 Accrued advisory fee payable 16,415 ------------------- Total liabilities 18,346 ---------------------- Net Assets $ 12,318,624 ====================== Net Assets consist of: Paid in capital $ 10,829,388 Accumulated undistributed net investment income (108,185) Accumulated undistributed net realized gain (113,425) Net unrealized appreciation on investments 1,710,846 ---------------------- Net Assets, for 975,430 shares $ 12,318,624 ====================== Net Asset Value Net Assets Offering price and redemption price per share ($12,318,624/975,430) $ 12.63 ======================
IMS Capital Value Fund Statement of Operations for the six months ended April 30, 1998 (Unaudited)
Investment Income Dividend Income $ 59,250 Interest Income 4,233 --------------------- Total Income 63,483 Expenses Investment advisory fee $ 86,761 Administration fee 15,000 Transfer agent fee 11,964 Fund accounting fee 8,100 Legal fees 4,244 Custodian fee 4,003 Amortization of ogranizational expenses 2,416 Audit fees 690 Registration fees 1,954 Shareholder reports 1,957 Trustees fees 270 Miscellaneous 2,306 --------------------- Total operating expenses before reimbursement 139,665 Reimbursed expenses (42,115) --------------------- Total operating expenses 97,550 --------------------- Net Investment Income (Loss) (34,067) --------------------- Realized & Unrealized Gain (Loss) Net realized gain (loss) on investment securities (90,558) Change in net unrealized appreciation (depreciation) on on investment securities 1,511,303 --------------------- Net gain (loss) on investment securities 1,420,745 --------------------- Net increase (decrease) in net assets resulting from operations $ 1,386,678 =====================
Statement of Changes in Net Assets (Unaudited) For the six For the months ended year ended April 30, 1998 October 31, 1997 Increase/(Decrease) in Net Assets Operations Net investment income (loss) $ (34,067) (48,844) Net realized gain (loss) (90,558) 672,917 Change in net unrealized appreciation (depreciation) 1,511,303 (44,863) --------------- --------------- Net Increase in net assets resulting from operations 1,386,678 579,210 --------------- --------------- Distributions to shareholders: From net investment income (25,273) - From net capital gain (682,377) - --------------- --------------- --------------- --------------- Total distributions (707,650) - --------------- --------------- Share Transactions Net proceeds from sale of shares 2,011,841 5,141,834 Shares issued in reinvestment 702,348 - Shares redeemed (1,006,542) (529,761) --------------- --------------- Net increase in net assets resulting from share transactions 1,707,647 4,612,073 --------------- --------------- Total increase in net assets 2,386,675 5,191,283 Net Assets Beginning of period 9,931,949 4,740,666 --------------- --------------- End of period [including undistributed net investment income (loss) $(34,067) and $(48,844), respectively$] 12,318,624 $ 9,931,949 =============== ===============
IMS Capital Value Fund Financial Highlights (Unaudited) For the six For the For the months ended year ended period ended Selected Per Share Data April 30, 1998 October 31, 1997 October 31, 1996 Net asset value, beginning of period $12.06 $10.76 $10.00 ----------------- ---------------- ---------------- Income from investment operations Net investment income -(0.04) (0.08) (0.01) Net realized and unrealized gain (loss) 1.37 1.38 0.77 ----------------- ---------------- ---------------- Total from investment operations 1.41 1.30 0.76 ================= ================ ================ Less Distributions From net interest income (0.03) 0.00 0.00 From net capital gain (0.81) 0.00 0.00 ----------------- ---------------- ---------------- ----------------- ---------------- ---------------- Total distributions (0.84) 0.00 0.00 ----------------- ---------------- ---------------- Net asset value, end of period $12.63 $12.06 $10.76 ================= ================ ================ Total Return 25.(a) 12.08% 30.(a) Ratios and Supplemental Data Net assets, end of period (000) $ 12,319 $9,932 $4,741 Ratio of expenses to average net assets 2.(a) 2.54% 1.(a) Ratio of expenses to average net assets before reimbursement 1.(a) 1.97% 3.(a) Ratio of net investment income to average net assets (0.(a)) (0.64%) (0.(a)% Ratio of net investment income to average net assets before reimbursement (1.(a)) 1.20% (2.(a)% Portfolio turnover rate 34.(a) 34.76% 3.56% Average commission rate 0.05142 0.0439 0.0416
IMS CAPITAL VALUE FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 NOTE 1. ORGANIZATION The IMS Capital Value Fund. (the "Fund") was organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust"), on July 30, 1996 and commenced operations on August 5, 1996. The Trust 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 growth to its shareholders a value oriented contrarian philosophy by investing in large high quality dividend paying U.S. companies. 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 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. 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 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 Adviser, subject to review of the Board of Trustees. 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. IMS CAPITAL VALUE FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 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 an annual 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. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains IMS Capital Management, Inc. (the "Adviser") to manage the Fund's investments. Carl W. Marker, Chairman and President 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. As compensation for its management services the Fund is obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 1.59% of the average daily net assets of the Fund. For the period from November 1, 1997 through April 30, 1998, the Adviser received a fee of $86,761 from the Fund. The Adviser is voluntarily reimbursing certain Fund expenses. 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 six months ended April 30, 1998, the Administrator received fees of $15,000 from the Adviser for administrative services provided to the fund. IMS CAPITAL VALUE FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The fund retains AmeriPrime Financial Securities, Inc. (the Distributor) to act as the principal distributor of fund shares, there were not any payments made to the Distributor for the six month period ended April, 30, 1998. Certain members of management of the Administrator and the Distributor are also members of management of the AmeriPrime Trust. NOTE 4. CAPITAL SHARE TRANSACTIONS As of April 30, 1998 there was an unlimited number of no par value shares of capital stock authorized for the Fund. Paid in capital at was $10,829,388. Transactions in capital stock were as follows: For the year ended For the year ended For the year ended For the year ended April 30, 1998 April 30, 1998 October 31, 1997 October 31, 1997 Shares Dollars Shares Dollars Shares sold 173,176 $2,011,841 426,253 $5,141,834 Shares issued in reinvestment of dividends 65,032 702,348 0 0 Shares redeemed (86,549) (1,006,542) (43,144) (529,761) -------- ----------- -------- --------- 151,659 $1,707,647 383,109 $4,612,073
NOTE 5. INVESTMENTS For the period from November 1, 1997 through April 30, 1998, purchases and sales of investment securities, other than short-term investments, aggregated $4,702,710 and $3,702,590, respectively. The gross unrealized appreciation for all securities totaled $2,132,463 and the gross unrealized depreciation for all securities totaled $421,618 for a net unrealized appreciation of $1,710,845. The aggregate cost of securities for federal income tax purposes at April 30, 1998 was $10,605,469. IMS CAPITAL VALUE FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 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. Fountainhead Special Value Fund King Investment Advisors, Inc. Fellow Shareholders: For the six months ended April 30, 1998, we are pleased to report that the Fountainhead Special Value Fund delivered outstanding results, generating a return of 23.2% for its shareholders and outperforming its benchmark indices, the S&P 500 (+22.5%) and the S&P 400 MidCap Index (+19.2%). In fact, for the twelve months ended April 30, 1998, the Fund handily outperformed its comparable indices, returning 67.1% (versus 41.1% for the S&P 500 and 47.9% for the S&P 400), and ranked second of 278 among all other mid-cap funds over the same time frame, according to Lipper Analytical Services. CHART Recent Success and the Role of our Private-Market Value Approach Consistent with our prior period's results, the Fund's returns were once again aided by our success in identifying stocks trading at a discount to their private-market value. Over the six-month period, five additional mergers or acquisitions of stocks owned in the Fund were announced. We started 1998 on solid ground as Southern New England Telecommunications (SNG), a Connecticut-based independent telecommunications company, announced a definitive agreement to be acquired by SBC Communications, Inc. for 0.8784 shares of SBC stock ($65.83 per share). KING first bought SNG for the Fund at the end of June 1997 at an average price of $40.15 per share. At the time, we believed the Company would eventually be acquired as industry consolidation progressed and companies continued to build mass to compete more efficiently and effectively. We estimated that SNG was worth approximately $60 to $70 per share on a deal. As a result of the acquisition, SNG generated a return of more than 60% for the Fund's shareholders. After the acquisition was announced, we sold our position to realize our gains, as SNG had met our price target. The merger will probably not close until the end of 1998 as both companies seek regulatory approval and may face possible antitrust concerns. Rather than waiting to receive SBC stock, we decided to redeploy the capital elsewhere. Also in January, Comcast UK Cable Partners, a small-cap operator of Comcast Corp.'s cable-television and telecommunications assets in the United Kingdom, announced an agreement to be acquired by NTL, Inc. at a 30% premium to the prior day's close. On February 13, the acquisition of Coast Savings Financial (CSA) by H. F. Ahmanson (AHM) closed. The acquisition, announced in October 1997, had to that point generated a 37% return for the Fund's shareholders. After the announcement of AHM's CSA acquisition, we decided to hold CSA and receive AHM stock, as AHM's fundamentals were positive and the recent CSA purchase made it California's trophy S&L franchise. We believed that another financial institution would eventually acquire AHM and that it was worth $80 to $90 per share. Our analysis proved accurate. On March 17--just over a month after the CSA merger closed--AHM announced a definitive agreement to be acquired by Washington Mutual (WAMU) for approximately $80 per share in stock. As a result of our original position in CSA, Fountainhead shareholders were able to experience a 52% gain over the sixteen-month holding period. Also in March, 360(degree) Communications Company (XO)--one of the Fund's larger positions--entered into an agreement to be purchased by Alltel, Inc. We first bought XO when it was trading at a steep discount to its private-market value; we thought the Company, with expertise in its field of business, was a takeover candidate for a larger telecommunications company. A takeover would serve as a catalyst for the Company to reach its private-market value of approximately $35 per share. On March 16, 1998, XO announced a definitive agreement to be acquired by Alltel (AT), an Arkansas-based wireline- and wireless-telecom company, for approximately $34 per share in stock (0.74 Alltel shares for each XO share). XO was one of the first purchases made in the Fund at an average cost of $18.88 per share. The result is an 80% price appreciation over the sixteen-month holding period. In light of the acquisition news, we are reviewing the transaction to see if it would be beneficial to hold out for Alltel stock. We believe that AT itself may be a takeover candidate. Finally, on April 3, Long Island Bancorp (LISB) announced a definitive agreement to be acquired by Astoria Financial for approximately $70 per share in stock. The LISB acquisition will give Astoria $16.6 billion in assets and 96 branches on New York's Long Island and surrounding areas; the area's ten million residents comprise one of the wealthiest markets in the nation. KING originally purchased LISB for its solid fundamentals; non-performing assets were only 1.03% of total assets, earnings had been strong, and LISB's mortgage-banking divisions provided diversified revenues. In addition, LISB, well-positioned in its markets, was an attractive acquisition candidate for a larger national bank looking to tap into the New York market or for a large New York institution seeking to solidify market share. We estimated LISB's private-market value in the $55 to $65 per-share range. We originally bought the stock at an average cost of $40.63 per share; thus, our shareholders' price appreciation has been 60% over its relatively short holding period. At this point, we are analyzing Astoria's prospects, which are quite good. In fact, it is possible that Astoria will be purchased in the next one to two years. We estimate the private-market value (of the proforma Astoria) to be in the $80 to $90 per-share range. Why Own Mid-Cap Stocks? Conventional wisdom holds that small- and mid-cap stocks are always more risky investments than their large-cap brethren. As usual, conventional wisdom is wrong. Recent years have seen one of the most narrow markets in history, one in which just a handful of large-cap names have driven the performance of the well-known indices. For example, in 1997, only 33 stocks in the S&P 500 (6% of the index) accounted for 50% of the return for the year. In 1996, only 25 (5% of the index) accounted for 50% of the move. While these large-cap names outperform for a number of reasons, three are primary: Large-cap stocks are generally more liquid. Index funds (primarily those based on the large-cap-biased S&P 500) are extremely popular. Large sums of money are flowing into the markets; managers are penalized for holding cash, and thus they must put their capital to work somewhere. The well-known large-cap names generally require less analytical work, so they have become a parking place for unwanted cash. As a result, returns have been stellar in the large-cap names; however, their valuations have now reached historically high levels. In fact, most of these stocks are trading at huge premiums to their respective growth rates. For example: 1998E P/E 1999E P/E P/E-to-Growth Rate Price/Book Pfizer 57.6x 48.1x 3.3x `99E 2.7x `98E 19.0x Gillette 40.0x 33.9x 2.3x `99E 1.9x `98E 14.1x Proctor & Gamble 31.0x 27.4x 2.4x `99E 2.1x `98E 10.9x Merck 27.4x 23.6x 1.9x `99E 1.6x `98E 11.4x Bristol-Myers Squibb 29.5x 26.3x 2.2x `99E 2.0x `98E 14.7x Dell Computer 38.9x 30.8x 1.3x `99E 1.0x `98E 35.5x Microsoft 55.7x 46.9x 2.3x `99E 2.0x `98E 201.x Coca-Cola 45.1x 38.6x 2.6x `99E 2.2x `98E 25.3x We do not own any of these commonly held stocks because their valuations are too high. Stocks are frequently considered fully valued when trading at, or in some cases, at a slight premium to, their respective growth rates. While many of the companies in the above list are certainly well-run, have great franchises and excellent management teams, and in many cases trade at slight premiums to their peers, their current multiples are extreme. Quality is worth a higher premium, but is it worth these extreme multiples--in many cases double that of the S&P 500 and two to three times that of their growth rates? Furthermore, the stock prices of many of these large-cap companies continue to rise, despite declining earnings estimates for the group. On the other hand, the estimates for small- and mid-cap stocks are remaining constant, or in many cases rising. In the small-cap area, estimates have been revised, but on average a mere 1.6% downward. The mid-cap earnings estimates are almost unchanged, falling 0.1% over the past month. In addition, most of the large-cap multinationals have some Asian exposure. If the situation in the Far East continues to deteriorate, further downward revisions may be necessary. (Motorola, Intel, Hewlett-Packard, and many other high-tech names have already felt the pressure). Should earnings estimates be lowered, and projected earnings growth rates be revised down, these stocks will look more expensive on a valuation basis. The question now becomes how to define risk. If risk is a function of downside potential and overvaluation, then many large-cap stocks, while wonderfully well-run companies, are currently risky investments. King Investment Advisors is a value manager. As a result of the run-up in most large-cap stocks over the last several years, and the lofty multiples at which they are currently trading, the mid- and small-cap areas seem very attractive to us at current levels. While many of these stocks may prove more volatile over short periods of time (quarter-to-quarter), we are paying more realistic prices for these companies as evidenced by our equity statistics outlined below (as April 30, 1998): Fountainhead S&P 500 Price/Earnings (`98E): 19.4x 23.1x Price/Book: 3.5x 6.0x Despite the historically high valuation level of the overall market, we continue to find value in attractive, unique companies in the mid- and small-cap areas. This market niche dovetails nicely with our investment style and philosophy, as many smaller companies have solid management, differentiated strategies, and often dominance in a particular market segment or geographical region; however, these companies are not often large enough to compete effectively with the larger national players. As a result, they are frequently considered attractive assets for a larger company and are bought out. (We certainly are not the only ones uncovering these gems; larger competitors and (eventually) the market also identify them over time. We merely try to be there first to realize most of the potential gains.) Although we do not actively seek companies viewed solely as acquisition candidates, our investment style and philosophy tend to identify companies which others may also eventually view as attractive. Essentially, benefiting from merger and acquisition activity is a natural by-product of our investment process. We are pleased to report that our strong performance record continues to attract new investors, while our existing investors have stayed with us. The Fund's assets grew from $2.6 million on October 31, 1997 to $6.7 million on April 30, 1998. Of course, this represents capital appreciation as well as investments by new shareholders. Since all our investment team, and most of our administrative staff, have money invested in the Fund, you can be assured we will continue to do our best. Sincerely, Roger E. King Chairman and President Fountainhead Special Value Fund Schedule of Investments - (Unaudited) - April 30, 1998 Common Stocks - 99.9% Shares Value Banks and Bank Holding Companies - 16.2% Banc One Corp. 880 $ 51,755 Bayview Capital Corp. 6,500 212,063 Reliance Bancorp, Inc. 2,750 108,625 Riggs National Corp. 7,200 207,450 Trans Financial Inc. 2,450 135,975 United Bankshares, Inc. 4,600 120,175 Wells Fargo & Co. 700 257,950 --------------- 1,093,993 --------------- Communications - 17.2% 360 Communications (a) 7,400 226,162 Clearnet Communications Inc. (a) 17,000 236,937 DSC Communications, Inc. (a) 10,100 181,800 Paxon Communications Corp. 18,000 241,875 Rural Cellular Corp (a) 8,400 149,100 Western Wireless Corp.(a) 6,400 124,800 --------------- --------------- 1,160,674 --------------- Computer Services & Software - 2.3% Intuit Inc. (a) 2,900 154,244 --------------- Drugs - 6.8% Dura Pharmaceuticals, Inc. 6,400 169,600 --------------- Financial Services - 3.5% FBR Asset Investment Corp. (b) 5,000 105,000 Lehman Brothers Holdings 1,800 127,912 --------------- --------------- 232,912 --------------- Healthcare & Healthcare Services - 12.0% Capital Senior Living Corp. 16,000 239,000 Integrated Health Services 3,600 138,825 Mariner Health Corp. 710 12,869 Paragon Health Network, Inc.(a) 9,990 186,688 St. Jude Medical Inc. (a) 6,500 230,344 --------------- --------------- 807,726 --------------- Insurance - 2.7% Amerin Corp. (a) 5,800 184,512 --------------- Media & Leisure - 7.0% Century Communications-CL 17,000 263,500 Lynch Corp. (a) 1,500 156,750 US WEST Media Group, Inc. (a) 1,400 52,850 --------------- 473,100 --------------- Fountainhead Special Value Fund - continued Schedule of Investments - (Unaudited) - April 30, 1998 - continued Common Stocks - continued Shares Value Oil & Gas Services - 13.7% R & B Falcon Corp. (a) 6,900 221,231 Rowan Companies, Inc. (a) 8,000 235,500 Santa Fe International Corp. 6,900 270,394 --------------- --------------- 727,125 --------------- Oil & Gas Exploration & Production - 2.9% Neuvo Energy Co. (a) 5,400 192,375 --------------- Retail Stores - % Duane Reade Inc. 12,000 285,000 Dominick's Supermarkets, Inc 6,000 240,375 Saks Holdings Inc. 10,000 223,125 --------------- --------------- 748,500 --------------- Thrifts, Savings & Loans - 11.6% Ahmanson (H.F.) & Co. 1,750 133,438 Bank United Financial (a) 14,500 235,625 Coast Federal 1,300 22,019 Dime Bancorp 1,900 58,306 Long Island Bancorp 2,400 158,400 St. Paul Bancorp 2,000 50,000 Sovereign Bancorp. Inc 6,480 122,310 --------------- 780,098 --------------- TOTAL COMMON STOCKS (Cost $5,510,512) 6,724,859 --------------- Money Market Securities - 0.2% Star Treasury, 4.92%, 12/31/98 (Cost $10,431) 10,431 --------------- TOTAL INVESTMENTS - 100% (Cost $5,520,943) 6,927,665 Liabilities less other assets - (0.1%) (3,990) --------------- Total Net Assets $ 6,923,675 =============== Legend (a) non-income producing (b) private placement
Fountainhead Special Value Fund April 30, 1998 Statement of Assets & Liabilities (Unaudited) Assets Investment in securities, at value (cost $5,520,943) $ 6,735,290 Subscriptions receivable 165 Dividends receivable 1,960 Interest receivable 634 -------------------- Total assets 6,738,049 Liabilities Accrued investment advisory fee payable $ 6,578 Other payables and accrued expenses 171 ------------------- Total liabilities 6,749 -------------------- Net Assets $ 6,731,300 ==================== Net Assets consist of: Paid in capital $ 5,282,998 Accumulated undistributed net investment income (8,955) Accumulated undistributed net realized gain 242,910 Net unrealized appreciation on investments 1,214,347 -------------------- Net Assets, for 412,933 shares $ 6,731,300 ==================== Net Asset Value Net Assets Offering price and redemption price per share ($6,731,300/412,933) $ 16.30 ====================
Fountainhead Special Value Fund Statement of Operations for the six months ended April 30, 1998 (Unaudited) Investment Income Dividend Income $ 3,488 Interest Income 13,150 ------------------- Total Income 16,638 Expenses Investment advisory fee $ 20,446 Administration fees 15,297 Transfer agent fees 6,952 Pricing & bookkeeping fees 4,800 Legal fees 4,173 Custodian fees 3,346 Audit fees 690 Registration fees 12,275 Shareholder reports 3,375 Trustees' fees 270 Miscellaneous 224 ------------------- Total operating expenses before reimbursement 71,848 Reimbursed expenses (47,799) ------------------- Total operating expenses 24,049 ------------------- Net Investment Income (7,411) ------------------- Realized & Unrealized Gain (Loss) Net realized gain on investment securities 257,818 Change in net unrealized appreciation on investment securities 849,358 ------------------- Net gain (loss) on investment transactions 1,107,176 ------------------- Net increase in net assets resulting from operations $ 1,099,765 ===================
Fountainhead Special Value Fund Statement of Changes in Net Assets (Unaudited) For the six For the month period ended period ended Increase/(Decrease) in Net Assets April 30, 1998 October 31, 1998 (a) Operations Net investment (loss) $ (7,411) $ (1,544) Net realized gain 257,818 19,269 Change in net unrealized appreciation 849,358 364,989 ----------------- ----------------- Net Increase in net assets resulting from operations 1,099,765 382,714 ----------------- ----------------- Distributions to shareholders: From net investment income - - From net realized gain (34,177) - ----------------- ----------------- Total distributions (34,177) - ----------------- ----------------- Share Transactions Net proceeds from sale of shares 3,054,107 2,274,079 Shares issued in reinvestment 34,164 - Shares redeemed (51,760) (27,592) ----------------- ----------------- Net increase in net assets resulting from share transactions 3,036,511 2,246,487 ----------------- ----------------- Total increase in net assets 4,102,099 2,629,201 Net Assets Beginning of period 2,629,201 - ----------------- ----------------- End of period [including undistributed net investment loss of ($7,411) and ($1,544), respectively. $ 6,731,300 $ 2,629,201 ================= ================= (a) December 31, 1996 (commencement of operations) to October 31, 1998
Fountainhead Special Value Fund Financial Highlights (Unaudited) Selected Per Share Data For the six For the month period ended period ended April 30, 1998 October 31, 1998 (c) Net asset value, beginning of period $ 13.35 $ 10.00 ============ ============ Income from investment operations Net investment income (0.03) (0.02) Net realized and unrealized gain (loss) 3.12 3.37 ------------ ------------ Total from investment operations 3.09 3.35 ------------ ------------ Less Distributions From net interest income - - From net realized gain (0.14) ------------ ------------ ------------ Total distributions (0.14) ------------ ------------ Net asset value, end of period $ 16.30 $ 13.35 ============ ============ Total Return 46.(a) 40.(a) Ratios and Supplemental Data Net assets, end of period (000) $6,731 $2,629 Ratio of expenses to average net assets 1.11%(a)(b) 0.97%(a) Ratio of expenses to average net assets before reimbursement 3.33%(a)(b) 8.25%(a) Ratio of net investment income to average net assets -(2.56)%(a) (0.16%(a) Ratio of net investment income to average net assets before reimbursement -(0.34)%(a) (7.45)%(a) Portfolio turnover rate 133.78%(a) 130.63(a) Average commissions paid 0.0529 0.0637 (a) Annualized (b) For the period November 1, 1997 to the fund's advisor agreed to reimburse expenses (c) December 31, 1996 (commencement of operations) to October 31, 1998
FOUNTAINHEAD SPECIAL VALUE FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 NOTE 1. ORGANIZATION The Fountainhead Special Value Fund. (the "Fund") was organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust"), on October 20, 1995 and commenced operations on December 31, 1996. The Trust is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The Funds investment objective is to provide long term capital growth. 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 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. 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 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 Adviser, subject to review of the Board of Trustees. 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 April 30, 1998 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 an annual 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. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains King Investment Advisors, Inc. (the "Adviser") to manage the Fund's investments. Roger King, President 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. As compensation for its management services the Fund is obligated to pay the Adviser 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 period from November 1, 1997 through April 30, 1998, the Adviser has received a fee of $20,446 from the Fund. The Adviser is voluntarily reimbursing certain Fund expenses. There is no assurance that such reimbursement will continue in the future. FOUNTAINHEAD SPECIAL VALUE FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 NOTE 4. CAPITAL SHARE TRANSACTIONS As of April 30, 1998 there was an unlimited number of no par value shares of capital stock authorized for the Fund. Paid in capital at April 30, 1998 was $. Transactions in capital stock were as follows: For the six months For the six months For the For the ended ended period ended period ended April 30, 1998 April 30, 1998 October 31, 1997(a) October 31, 1997(a) Shares Dollars Shares Dollars Shares sold 216,924 $3,054,108 199,337 $2,474,079 Shares issued in reinvestment of dividends 2,614 34,164 - - Shares redeemed (3,570) (51,760) (28,359) (27,592) ------- -------- -------- -------- 215,968 $3,036,512 196,962 $2,246,487 (a) For the period December 31, 1996 (commencement of operations) to October 31, 1997.
NOTE 5. INVESTMENTS For the period from November 1, 1997 through April 30, 1998, purchases and sales of investment securities, other than short-term investments, aggregated $5,949,938 and $2926,617, respectively. The gross unrealized appreciation for all securities totaled $1,214,525 and the gross unrealized depreciation for all securities totaled $178 for a net unrealized appreciation of $1,214,347. The aggregate cost of securities for federal income tax purposes at April 30, 1998 was $5,520,943. 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. May 2, 1998 Dear Shareholder: The events of the last few months have convinced us that the world has gone crazy when it comes to the valuation of securities. In fact, we do not believe that there is a "securities" market anymore. Instead, we believe that it should be called a "specurities" market; this would take the "secure" part out, while spotlighting the speculative nature of the marketplace. The Corbin Small-Cap Value Fund is not caught up in that madness and consequently, for the past six months, paid the price. While everyone would agree that Rome was not built in a day, it seems that fortunes on Wall Street can be made almost that quickly. Pfizer, EntreMed, Lucent Technologies, and a few others have been the latest to be caught up in this tidal wave of speculative buying. As we said in our first annual report, the Fund's goal is to produce a 12%-18% return per year. With the Fund two months away from its first full year in operation, we believe that will be achieved. More importantly, this return would have been delivered whether times were good or bad, in my opinion. We have assembled a group of securities that are not really correlated with any major market index; they are a group that will move based on their own fundamentals. OVERALL PORTFOLIO CHARACTERISTICS AND COMMENTARY As of April 30th, the portfolio contained 34 equities, with 100% of the money in equity securities, and 0% in cash. During the first quarter of the year, our research team has been on the road trying to find investment opportunities that have no risk (defined as long term impairment of capital) and that have the potential to double in price during the next three-to-five years. This is the same thing we have been doing for the last six years, with an overall accomplishment of our goals. What has changed over that time is the view of the market toward certain stocks and certain industries. In 1990, a broker could have stood on the street corner at Seventh and Main in Fort Worth selling shares of Chase, Citicorp, Travelers, and Wells Fargo at 15% off their current price and gotten few takers. For decades, these stocks rarely achieved any premium over their book value; today they stand at over 5X book. Which is closer to the true valuation, where they are now, or where they had been for decades? When I came to Fort Worth for school, the hot stocks both here and on Wall Street were Western Company, Gearheart, and Pengo. When the books were closed on these stocks, they all ended up in the worst chapter of them all: Chapter 11. For proof of how quickly things can change on Wall Street, investors should look at those three gems. Some people think that our view is narrow-minded and pessimistic in this new era of prosperity. However, many investors have forgotten one thing: risk. When everyone is convinced that a new time has dawned, risk is at its highest point, and that our participation is limited on the downside. The way this is accomplished is through the "three Vs": virtue, verification, and valuation. By virtue of our process, we are going to turn up names that over the long-term will be capable of doubling in price over our investment time horizon. These are statistically cheap businesses that have favorable fundamentals. We verify these facts by visiting the companies before we invest, and then we revisit them to make sure the situation has not changed. We invite you to call Dick Moeller at VTEL, Tim Duke at Steel of West Virginia, Jim Beltrame at Successories, or almost any other CEO of a stock in the portfolio to ask about our verification and "hands-on" activity. Finally, our valuation techniques ensure that we will receive substantially more than we are paying for. We will not "pay-up" for something that is trendy, despite its short-term momentum. Runaway bull markets have the ability to make smart people look dumb, and dumb people look pretty smart. After twenty years of buying stocks, we know that this current craze will also pass, and when it does, many people will be weeping. This change may begin tomorrow, or not for some period of time. However, we believe that when it does occur, what we do and how we do it will have earned the most important V, that of vindication. PERFORMANCE DISCUSSION As the saying goes, "Which would you rather have first, the good news or the bad news?" The good news is that, since June 30, 1997 (our inception date) the Fund has returned 11.73%, very close to our annual goal of 12%-18%. The bad news is that the Fund generated a total return of 1.30% for the six month period ended April 30, 1998. The Russell 2000 finished up 12.14% and the S&P 600 finished up 13.13%. This was a bitter pill to swallow, particularly because it appeared that the half-year period would be relatively quiet, thanks to the profit picture and steady U.S. interest rates. The "Magnificent Seven" (Duckwall-Alco, Durakon, Quanex, Perceptron, Successories, VTEL, and RailTex) let the portfolio down. Since these securities comprised a significant portion of the portfolio at the end of the period, it was disappointing to see them languish. With that in mind, we have taken the initiative to encourage these, and other portfolio companies, to move forward with plans to increase shareholder value and investor interest. Our efforts have succeeded at several firms, so far and we will continue to push for moves to increase the value of the shares we hold. We are not satisfied to let our stocks remain in their current range, because their potential is too great. If each company adopts our programs to augment its already strong operating results, we believe these stocks' true potential will be shown. DISCUSSION OF TRANSACTIONS PURCHASES AND SALES Purchase of Aames Financial (AAM) - We built a position in this leader in the sub-prime lending business, as the company adopted more conservative accounting practices, which should reduce some investor concerns. Purchase of Bonded Motors (BMTR) - The company is one of the largest rebuilders of automotive engines in the country. The firm trades at 11X this year's earnings estimate, with a 25%-30% projected growth rate. Purchase of Dawson Production (DPSI) - The company is a leader in the petroleum and natural gas workover business in the Southwest. Purchase of Dawson Geophysical (DWSN) - The company is the second largest on-shore geophysical company in the U.S. Purchase of Delta Finance Corp. (DFC) - DFC is a sub-prime lender in the same industry as AAM. Delta has some of the most conservative gain-on-sale accounting practices in the business, which, after our meeting with management, appeared to make the stock dramatically undervalued. (See below) Purchase of Friendly Ice Cream (FRND) - The company has a good reputation and was brought public at a low ----------------------------------------- cash-flow multiple. Purchase of GT Bicycles (GTBX) - The company is a leading manufacturer of mid-to premium-priced bicycles. The stock was purchased at 11X expected 1998 earnings, and the company is estimated to grow 17% per year over the next 5 years. Purchase of Lancer Corp. (LAN) - The company is the world's leading maker of products to dispense fountain drinks. It also makes other products related to the beverage business. Purchase of Middleby Corp. (MIDD) - Middleby is the leader in the institutional restaurant equipment business. It trades at 12x earnings, with a 15% growth rate. Purchase of Motor Car Parts & Accessories (MPAA) - The firm is a leading rebuilder of engine starters for the automotive industry. It traded at 12X this year's earnings and has a 20% growth rate. Purchase of Play-by-Play Toys (PYBP) - The firm is a leader in the toy business, as the Primary Warner Brothers licensee. The company also produces crane games. Purchase of Republic Group (RGC) - The company recycles paper and is a leader in the wallboard industry. It pays a slight dividend yield, along with great growth prospects. Purchase of Seitel (SEI) - Seitel is one of the leading geophysical firms in the country. It has a 30% expected growth rate and was acquired at 15X earnings. Purchase of Unit Corp. (UNT) - The company is involved in the production of oil and gas in the Anadarko and ------------------------------ Permian Basin. Sale of Altron (ALTN) - This position was eliminated due to its relative portfolio weighting. Sale of Alrenco (RNCO) - The position was sold after it had appreciated significantly. Sale of Award Software (AWRD) - This position was eliminated due to its relative portfolio weighting. Sale of Commercial Intertech (TEC) - The company reached its price objectives and was sold. Sale of Computational Systems (CSIN) - The company was bought out by Emerson Electric. Sale of Computer Language Research (CLRI) - The company was bought-out by Thomson Corporation, at a premium of more than 100% above our purchase price. Sale of Deflecta-Shield (TRUX) - The company was acquired by Lund. Sale of Delta Financial Corp. (DFC) - We sold the stock after the price increased 80% in less than two months. While this was not intended to be a short-term position, the rapid appreciation appeared to make the stock relatively fairly valued. Sale of Flexsteel Industries (FLXS) - The stock was sold due to its price appreciation. Sale of Friendly Ice Cream (FRND) - The company showed poor prospects. Sale of Galoob Toys (GAL) - After beginning to question the future of the company, we took advantage of aggressive quarter-end buying to sell our position. Sale of Glenayre Technologies (GEMS) - The company did not realize its potential within our target time period. Sale of Haggar Corp. (HGGR) - The company showed no progress toward a rebound to its former level of profitability. Sale of Oregon Metallurgical (OREM) - The company was bought out by Allegheny Teledyne. Sale of Outback Steakhouse (OSSI) - We sold our shares of Outback Steakhouse after the stock reached our target price. The stock price increased just over 100% in the one year we owned it. Sale of Quanex (NX) - This stock was sold due to the need in the portfolio to raise cash for stocks with greater - ------------------- potential. Sale of Sterling Electronics (SEC) - The company was purchased by Bell Industries. Sale of TransCoastal Marine Services (TCMS) - This stock was sold quickly after its IPO, due to significant price appreciation. Sale of Ultratech Stepper (UTEK) - The position was eliminated due to size. Sale of Wellman (WLM) - The long-term outlook for the company deteriorated, and the expected growth rate declined. We took advantage of some strength in the price to sell the stock. DISCUSSION OF SELECTED INDIVIDUAL SECURITY HOLDINGS The following are interesting developments concerning selected securities currently held in the portfolio: Aames Financial (AAM) - Aames received a $38 million investment from Ronald Perelman and Gerald Ford, who acquired 9.9% of the company. Several analysts on Wall Street have viewed this move as a signal that Perelman and Ford will eventually buy-out Aames. American Residential Services (ARS) - The company took a one-time charge for severance costs, lease costs, and reevaluation of the implementation of a new management information system. The charge led to lower than expected fourth quarter earnings but should better position the company for 1998. Cott Corporation (COTTF) - Cott experienced the second largest gain in market share in the soft drink industry, behind Coca-Cola. However, higher raw material prices and increased price competition from Coke and Pepsi resulted in a fourth-quarter loss. Duckwall-Alco Stores (DUCK) - Duckwall-Alco continued its expansion by opening 18 new stores in Texas and New Mexico. The openings brought the total number of stores to 225, and the company anticipates having 247 by August, 1998. Durakon Industries (DRKN) - The company announced plans to repurchase 10% of its stock. In addition, The Colonel's International, a manufacturer of automotive accessories, disclosed that it had approached Durakon to discuss a merger. Durakon responded by stating that it was not in the best interest of the Durakon shareholders to pursue such a merger. Perceptron (PRCP) - The company announced a share repurchase plan. RMI Titanium (RTI) - RTI received three new contracts to supply titanium to Boeing, Northrop Grumman, and French military contractor Aerospatiale. Reliability Inc. (REAL) - Reliability announced plans to close its North Carolina chip-testing plant, resulting in a first-quarter charge of approximately $0.05 per share. The company expects 1998 earnings to be about 10% lower than earlier estimates, but still above 1997 results. Steel of West Virginia (SWVA) - The company completed its plant modernization project during the first quarter. Successories (SCES) - Successories is nearing the final stages of testing its golf-related catalog, which, when completed, will be mailed to 1.2 million subscribers of Golf Digest. VTEL Corporation (VTEL) - VTEL continued to make progress with its merger with CLIX and intends to have it fully - ------------------------- integrated by July 31. Walden Residential Properties (WDN) - The company announced plans to enter a $47 million joint venture with Grupe Co. The venture involves two developments near Sacramento and will expand the company's business in California. FINAL THOUGHTS The past six months was a disappointment for our firm. While we have poured all of our efforts into our original research, the market has not rewarded those efforts. The "value" approach relies on the eventual "discovery" of its holdings by the broader market, but most of our holdings have remained undervalued in this market environment. We believe that this will change in the future, with our process being rewarded. We will continue to execute our discipline, realizing that what we do should not be measured over a couple of years, but rather over a long-term horizon. I continue to have only three personal investments; my shares of Corbin & Company and my shares of this Fund are two of those three. Over the last few months, I have bought more shares of the Fund and will continue to do so in the future. We have faith that our process will prove its worth, and we are excited to have you here with us for this great adventure. Sincerely, David A. Corbin, CFA President and Chief Investment Officer Corbin Small-Cap Value Fund Schedule of Investments - April 30, 1998 Common Stocks - 100.0% Shares Value Auto Parts & Accessories - 5.8% Bonded Motors Inc. (a) 8,000 $ 85,000 Motor Car Parts and Accessories 2,000 36,750 ----------------- ----------------- 121,750 ----------------- Bottled & Canned Soft Drinks - 3.5% Cott Corp (Quebec) 12,440 72,696 ----------------- Building Materials - 1.8% Republic Group Inc. 2,000 38,000 ----------------- Business Services - 4.7% Vtel Corp. (a) 17,410 97,931 ----------------- ----------------- Catalog & Mail Order Services - 3.7% Successories Inc. (a) 14,050 77,275 ----------------- Computer Programming Services - 0.2% Raster Graphics Inc. (a) 3,860 5,187 ----------------- Construction - 3.9% American Residential Services, Inc. (a) 7,400 80,937 ----------------- Department Stores - 3.7% Duckwall Alco Stores (a) 4,260 77,745 ----------------- Equipment Rental & Leasing - 1.0% Lancer Corp. (a) 1,500 21,750 ----------------- Fabricated Metal Products - 6.3% American Buildings Co. 1,630 56,642 Butler Manufacturing Co. 1,980 73,879 ----------------- ----------------- 130,521 ----------------- Corbin Small-Cap Value Fund Schedule of Investments - April 30, 1998 - continued Common Stocks - continued Value Financial Services - 2.2% Aames Financial 3,400 $ 46,537 ----------------- Food Service - 1.2% Middleby Corp. 3,000 24,000 ----------------- Furniture Manufactures - 3.7% Flexsteel Industries, Inc. 5,520 76,935 ----------------- Measuring & Controlling Devices - 3.4% Perceptron Inc. (a) 4,650 70,912 ----------------- Metal Mining - 2.7% RMI Titanium (a) 2,500 55,781 ----------------- Oil & Gas Services & Exploration - 5.1% Dawson Geophysical Co. 1,200 20,850 Dawson Production Services 1,600 21,000 Seitel Corp. 2,500 42,188 Unit Corp. 2,200 21,450 ----------------- ----------------- 105,488 ----------------- Power Distribution - 4.0% Reliability Inc. (a) 6,700 82,912 ----------------- Railroads - 4.0% Rail Tex Inc. (a) 5,700 84,431 ----------------- Real Estate - 3.9% Walden Residential Properties 3,300 80,437 ----------------- Recreational Vehicles - 10.1% Arctic Cat Inc. 9,470 94,700 Durakon Industries Inc. (a) 10,780 115,885 ----------------- ----------------- 210,585 ----------------- Restaurants - 4.1% Lone Star Steakhouse & Saloon (a) 4,030 85,638 ----------------- Trucks/Trailers - 4.0% Wabash National Corp. 2,715 83,826 ----------------- Steel Manufacturing - 13.4% Insteel Industries 9,180 67,130 Quanex Corp. 2,580 75,627 Steel West Virgina Inc.(a) 9,540 109,710 Webco Industries (a) 3,000 27,375 ----------------- ----------------- 279,842 ----------------- Toys - 3.6% GT Bicycles, Inc.(a) 6,800 44,200 Play by Play Toy & Novelties (a) 1,800 30,600 ----------------- ----------------- 74,800 TOTAL COMMON STOCKS (Cost $2,138,758) $ 2,085,916 ----------------- TOTAL INVESTMENTS - (Cost $2,138,758) 2,085,916 Other Assets less liabilities - 0.0% (2,576) ----------------- Total Net Assets - 100.0% $ 2,083,340 ================= Legend (a) non-income producing
Corbin Small-Cap Value Fund April 30, 1998 Statement of Assets & Liabilities (Unaudited) Assets Investment in securities, at value (cost $2,138,758) $ 2,085,916 Receivable for fund shares sold 1,836 Interest receivable 594 -------------------- Total assets 2,088,346 Liabilities Due to custodian bank $ 2,864 Accrued investment advisory fee payable 2,099 Payable for fund shares redeemed 43 ------------------- Total liabilities 5,006 -------------------- Net Assets $ 2,083,340 ==================== Net Assets consist of: Paid in capital $ 2,086,794 Accumulated undistributed net investment income (937) Accumulated undistributed net realized gain 50,325 Net unrealized appreciation on investments (52,842) -------------------- Net Assets, for 198,531 shares $ 2,083,340 ==================== Net Asset Value Net Assets Offering price and redemption price per share ($2,083,340/198,531) $ 10.49 ====================
Corbin Small-Cap Value Fund Statement of Operations for the six month period ended April 30, 1998 (Unaudited) Investment Income Dividend Income $ 7,714 Interest Income 3,368 ------------------- Total Income 11,082 Expenses Investment advisory fee $ 10,570 ------------------- Total Operating Expenses 10,570 ------------------- Net Investment Income (Loss) 512 ------------------- Realized & Unrealized Gain Net realized gain on investment securities 135,370 Change in net unrealized appreciation on investment securities (97,533) ------------------- ------------------- Net gain (loss) on investment securities 37,837 ------------------- Net increase in net assets resulting from operations $ 38,349 ===================
Corbin Small-Cap Value Fund Statement of Changes in Net Assets (Unaudited) For the six month For the period period ended ended Increase/(Decrease) in Net Assets April 30, 1998 October 31, 1997 (a) Operations Net investment income (loss) $ 512 $ (5) Net realized gain 135,370 5,918 Change in net unrealized appreciation (97,533) 44,691 --------------- --------------- Net Increase in net assets resulting from operations 38,349 50,604 --------------- --------------- 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 844,561 1,283,875 Shares issued in reinvestment 86,814 - Shares redeemed (128,408) (48) --------------- --------------- --------------- Net increase in net assets resulting from share transactions 802,967 1,283,827 --------------- --------------- Total increase in net assets 748,909 1,334,431 Net Assets Beginning of period 1,334,431 - --------------- --------------- End of period [including undistributed net investment loss of ($5)] $ 2,083,340 $ 1,334,431 =============== =============== (a) June 30, 1997 (commencement of operations) to October 31, 1997.
Corbin Small-Cap Value Fund Financial Highlights Selected Per Share Data For the six month For the period period ended ended Net asset value, April 30, 1998 October 31, 1997 (a) Net asset value, beginning of period $11.03 $10.00 ------------ ------------- Income from investment Operations Net investment income 0.00 0.00 Net realized and unrealized gain (loss) 0.10 1.03 ------------ ------------- Total from investment operations 0.10 1.03 ------------ ------------- Less Distributions From net interest income (0.01) 0.00 From net realized gain (0.63) 0.00 ------------ ------------- ------------ Net asset value, (0.64) ------------ Net asset value, end of period $10.49 $11.03 ============ ============= Total Return 2.62(a) 30.32(a) Ratios and Supplemental Data Net assets, end of period (000) $2,083 $1,334 Ratio of expenses to average net assets 1.25(a) 1.23(a) Ratio of net investment income to average net assets 0.06(a) 0.00(a) Portfolio turnover rate 67.01(a) 20.41(a) Average commissions paid 0.05232 0.0681 (a) Annualized
CORBIN SMALL-CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 NOTE 1. ORGANIZATION The Corbin Small-Cap Value Fund. (the "Fund") was organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust"), on June 10, 1997 and commenced operations on June 30, 1997. The Trust 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 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 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. 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 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 Adviser, subject to review of the Board of Trustees. 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 April 30, 1998 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 an annual 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. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains Corbin & Company (the "Adviser") to manage the Fund's investments. David A. Corbin , President 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. As compensation for its management services the Fund is obligated to pay the Adviser 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. For the period from November 1, 1997 through April 30, 1998, the Adviser received a fee of $10,570 from the Fund. 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 six months ended April 30, 1998, the Administrator received fees of $15,000 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 not any payments made to the Distributor for the six month period ended April, 30, 1998. Certain members of management of the Administrator and the Distributor are also members of management of the AmeriPrime Trust. CORBIN SMALL-CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 NOTE 4. CAPITAL SHARE TRANSACTIONS As of April 30, 1998 there was an unlimited number of no par value shares of capital stock authorized for the Fund. Paid in capital at April 30, 1998 was $2,086,794. Transactions in capital stock were as follows: For the six months For the six months For the period For the period ended April 30, ended April 30, ended October 31, ended October 31, 1998 1998 1997 1997 Shares Dollars Shares Dollars Shares sold 131,279 2,033,840 120,985 $1,283,875 Shares issued in reinvestment of dividends 53,733 758,703 - - Shares redeemed (46,444) (782,627) (4) (48) -------- --------- --- ---- 138,568 2,009,916 120,981 $1,283,827
NOTE 5. INVESTMENTS For the period from November 1, 1997 through April 30, 1998, purchases and sales of investment securities, other than short-term investments, aggregated $1,439,974 and $568,340, respectively. The gross unrealized appreciation for all securities totaled $122,848 and the gross unrealized depreciation for all securities totaled $175,690 for a net unrealized depreciation of $52,842. The aggregate cost of securities for federal income tax purposes at April 30, 1998 was $2,085,916. 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. Florida Street Funds Letter to Shareholders April 30, 1998 Dear Fellow Shareholders, I am pleased to present the first semi-annual report of the Florida Street Funds. This report covers activity in the funds during the six month period ended April 30. The report includes an investment review by each fund's portfolio manager, followed by security holdings and financial statements for the period. The last six months have been a period of significant progress for your fund family. Net assets totaled $9,406,489 as we began this fiscal year, and have now grown to $18,212,914. In addition, due to the Florida Street Bond Fund surpassing $10 million in net assets, the fund was assigned a ticker of "FLSBX". This gives investors daily access to price and dividend information. The Economy Even casual observers now know that the economic backdrop for the capital markets has been nearly perfect. In our judgment, it remains so. Three economic measures with particular influence on our domestic markets are GDP growth, inflation and interest rates. GDP Growth. None of the classic signs of recession risk are evident. Inventories are in general balance. The Federal Reserve's impulse to further move to a more restrictive monetary policy is stayed by the drag of the Asian crisis on the U.S. economy, the global weakness in prices of goods and commodities, and importantly, the productivity gains in the U.S. which have allowed wage levels to rise but have kept labor costs low. We expect GDP to rise 2.9% in 1998 with continued gains in the 1.5%-2.5% range in 1999. Inflation. If there is one macro-economic measure to obsess over, this would be an excellent choice. However, the outlook here remains positive. Recent market action indicates that equities can advance even in the face of decelerating earnings so long as the factors that drive the price/earnings ratio (notably inflation) are sufficiently positive. Many investors have noted that the equity market as a whole seems insensitive to disappointing earnings news at the moment. The lesson that can be learned from this observation is that inflation news may hold the key to market valuation in future months. Even modest news on the inflation front may move stock prices more than earnings announcements. We forecast that inflation in 1998 will be under 2.0%. Interest Rates. Due to the Federal Reserve's reluctance to cut short rates when the economy is so strong and the labor market so tight, interest rates have not followed inflation down in full measure. But there is downward pressure on short term rates despite the strong economy, and this influences the valuation investors are placing on U.S. equities. Despite the Fed's recent change in bias towards tighter credit, we believe there is a reasonable chance of a rate cut in the second half of this year, bringing short term rates down. On a more cautionary note, we would not be surprised to see a brief economic scare emerge. The most likely and most damaging would be an interruption in the steam of good news on the inflation front. Whether influenced by El Nino-influenced vegetable prices, an upturn in oil prices, or a seemingly aggressive labor contract settlement, coming after so much positive news such an event could easily have a short-term adverse effect on the equity markets. This possibility should concern traders but has less significance for strategic investors. We currently see a small gap between equity values and current interest rates and earnings. This gap does not appear large enough to trigger a shift in asset allocation, but it does make equities vulnerable to a negative surprise in the underlying fundamental trends discussed above. Our view is that this gap will be eliminated and further modest price gains realized over the next 12 months. As long as the underlying trends favor continued low inflation, low interest rates and higher earnings, equity will remain the asset of choice, and that will be reflected in historically high P/E ratios. Thank you for joining us as fellow shareholders of the Florida Street Funds. We will continue to work to justify your confidence. Sincerely, Walter A. Morales President and Chief Investment Officer Commonwealth Advisors, Inc. For the six-month period ending 4/30/98, Florida Street Bond Fund returned 5.01%. This compares with a return of 5.38% for the Salomon Gov't/Corp Index and 5.62% for the Merrill Lynch High Yield Bond Index. As of 4/30/98, the fund contained 81 issues. The fund has an average yield to maturity of 10.019% and an average maturity of 8.58 years. The last six months was a favorable environment for high yield bonds. The economy has continued to expand, but many economists believe that if the economy maintains its current growth rate, the Federal Reserve will move to raise interest rates later this year. We do not expect interest rates to rise in the near future and would not be surprised if the next major move in interest rates, which should occur early next year, results in a drop in interest rates. We base this belief on continued economic troubles in Asia and an expected slowdown in U.S. economic growth. If this scenario unfolds, it may not be favorable to high yield bonds. We continue to monitor the relative value of investment grade and non-investment grade bonds and at this moment, we prefer higher quality bonds. A portion of the your funds portfolio is invested in distressed securities, primarily corporate bonds. While this sector has provided exciting returns in the past, we are finding it difficult to find acceptable securities in this sector of the market. It may be that the economy has performed so well that very few distressed companies are available for investment. We believe that one should look at where we are in the credit cycle. It is highly possible that credit is too available, to both consumers and business. If this is the case, one would expect to see more companies experiencing financial distress in the next several quarters. The international sector of the bond market has produced enticing returns over the last six months. However, the fund has a very low allocation to international bonds. Concerns over the Asian economies and the affect on other countries have caused us to maintain a very low allocation to international bonds. While the market for Asian bonds has rallied, prices are still lower than they were one year ago. Despite of the lower prices, we do not find the market attractive and do not believe that investors in these markets are being compensated for the risks they are taking. Looking forward, the bond market should continue to benefit from low inflation. This has allowed bond investors to receive higher inflation adjusted returns than in previous years. We think this supports a bullish outlook on the bond market. Bonds are also benefiting from increased purchases by foreign investors. While we believe the outlook for bonds is quite favorable, investing in bond is not without risk. The economy continues to perform very well, and some economists believe that if the economy continues to expand at its current rate interest rates will have to rise. While an increase in interest rates would not benefit the bond market in the short run, we continue to feel that any rise will be short-lived. It is more likely, in our opinion, that the strength of the economy is preventing the rates from rallying. Florida Street Bond Fund Schedule of Investments - April 30, 1998 - (Unaudited) Common Stock - 4.7% Shares Value Colonial Properties Trust 3,000 $ 89,062 JPS Textile Group Inc. 4,997 58,715 Liberty Property Trust 3,800 97,138 Metals USA Inc. 5,000 97,500 Patriot American Hospitality, Inc. 2,000 50,500 Phone Tel Technologies PFD 4,000 216,000 Service Merchandise Co. (a) 10,000 21,250 TNP Enterprises, Inc. 1,525 49,181 Western Resources, Inc. 700 27,344 ------------------ TOTAL COMMON STOCK (Cost $729,252) 706,690 ------------------ Par Corporate Bonds - 87.5% Value Value Allied Waste Industries, 0.00%, 6/1/02 150,000 111,375 American Restaurant 11.5%, 2/15/03 300,000 301,500 American Restaurant 11.5%, 2/15/03 200,000 201,000 American Rice Inc., 13.0%, 7/31/02 260,000 208,000 American Standard 7.37%, 4/15/05 350,000 345,761 American Standard Cos. 7.37%, 02/01/08 100,000 97,250 Amscan Holdings, Inc. 9.87%, 12/15/07 250,000 262,500 Bally Total Fitness Holding Ser. B. 9.87%, 10/15/07 150,000 157,125 Beazer Gines USA 8.87%m 4/1/08 250,000 252,500 Beckman Coulter 7.45% 3/4/08 250,000 250,909 BHP Finance USA Put Bonds 6.42%, 3/1/26 200,000 198,753 Brazos Sportswear, 10.50%, 7/1/07 350,000 353,063 Brauns Fashions, 12.00%, 1/1/05 400,000 394,000 Building Materials Corp, 8.00% 10/15/07 100,000 100,750 CD Radio Inc. 0.0%,12/1/07 250,000 146,875 Cablevision Systems, 8.125%, 8/15/09 150,000 157,500 Callon Petroleum, 10.0%, 12/15/01 145,000 148,806 Cirrus Logic Inc. 6.0%, 12/15/03 205,000 158,362 Clark Refining & Marketing, Inc. 8.38%, 11/15/07 250,000 253,750 Cleveland Electric Illum, 9.00%, 7/01/23 100,000 109,334 Covad Comm. Group 0.0%, 3/11/03 250,000 138,125 DiGiorgio Corp., 10%, 6/15/07 100,000 100,000 Edison Brothers Stores 11.0%, 9/26/07 100,000 93,500 Executive Risk Cap Trust 8.68%, 2/1/27 200,000 216,978 First Union Florida 6.18%, 2/15/36 250,000 249,361 Global Star, 11.25%, 6/15/04 215,000 221,987 HIH Capital Ltd., 7.50%, 9/25/06 250,000 197,500 Homeland Stores, 10.0% 8/1/03 85,000 78,200 Hovnanian K Enterprises, 9.75% 6/1/05 100,000 101,250 Florida Street Bond Fund Schedule of Investments - April 30, 1998 (Unaudited) - continued Par Corporate Bonds - continued Value Value Integrated Health Services, 9.25%, 1/15/08 250,000 258,125 Iron Mountain Inc. 8.75%, 9/30/09 100,000 102,500 Jackson Products Inc. 9.50%, 4/15/05 125,000 124,214 K Mart Corp 8.00%, 12/13/01 15,000 15,374 Lechters Inc. 5.00%, 9/27/01 150,000 127,500 Mastellone Herma 11.75%, 4/1/08 250,000 261,250 Maxim Group Inc. 9.25%, 10/15/07 150,000 153,750 McLeod USA Inc. 0.0%, 3/01/02 150,000 112,125 Microcell Telecom, 0%, 12/00/01 300,000 224,250 Mrs. Fields Orig. 10.12%, 12/1/04 350,000 350,000 National Equipment 10.0%, 11/30/04 150,000 162,750 Niagra Mohawk Power Corp., 9.50% 3/1/21 250,000 265,777 Nine West Group Inc. 9.0%, 8/15/07 150,000 145,500 Ohio Savings Capital Trust I, 9.50%, 6/03/27 325,000 357,610 Paging Net Brasi 13.5%, 6/06/05 200,000 201,500 Pamida Inc. 11.75%, 3/15/03 105,000 108,150 Pathmark Stores 0.0%, 11/1/03 250,000 200,000 Perkins Family Resturants 10.12%, 12/15/07 80,000 85,200 Petroleum HT & PWR 12.25%, 2/1/05 100,000 98,750 Phar-Mor Inc. 11.72%, 9/11/02 55,000 58,300 RNC Corp. 0.0%, 2/15/03 250,000 158,750 Ram Energy 11.5%, 2/15/08 500,000 507,500 Revlon 8.62%, 2/1/08 250,000 250,625 Riverwood Intl Corp 10.25%, 4/1/06 500,000 520,000 Service Merchandise 9.0%, 12/15/04 500,000 379,375 Specialty Foods Corp. 11.25%, 8/15/03 100,000 92,500 Specialty Foods 0.00%, 8/15/05 250,000 97,500 Speedy Muffler King 10.875% 10/1/06 100,000 89,500 TCI Satellite 0.0%, 02/01/02 250,000 178,750 Telewest PLC. 0.0%, 10/1/00 250,000 202,500 Triangle Capital Trust 9.375%, 6/1/27 325,000 357,604 Trico Marine Services 8.50%, 8/1/05 115,000 115,575 Trump Atlantic Association Funding Inc. 11.25%, 5/1/06 100,000 100,000 UDC Homes, 12.50%, 5/1/00 135,000 137,025 Unisys Corp. 7.88%, 4/1/08 250,000 250,625 United Refining Co. 10.75%, 6/15/07 180,000 182,700 Zilog Inc. 9.5%, 3/1/05 500,000 435,000 ------------------ TOTAL CORPORATE BONDS 13,074,168 ------------------ (Cost $ 12,736,974) U.S. Government Obligations - 5.5% FHR 1496 PA, 8/15/22 221,859 210,109 FHR 1652 SC 111,810 112,849 FNMA 1993-167 5.09%,9/25/23 164,389 158,434 FNMA FRN 1994-51 SA 0.0%, 3/25/24 100,000 59,657 Freddie Mac FRN 0.0%, 9/15/22 100,000 84,574 Freddie Mac FHR 1560 7.87%, 11/15/22 214,390 199,253 ------------------ TOTAL U.S. GOVERNMENT OBLIGATIONS 824,876 ------------------ Money Market Securities - 0.7% Star Treasury 4.82% 10/31/98 (Cost $96,626) 96,626 ------------------ TOTAL INVESTMENTS - 98.4% (Cost $14,607,661) 14,702,360 Other Assets less liabilities - 1.6% 242,511 ------------------ TOTAL NET ASSETS - 100.0% 14,944,871 ==================
Florida Street Bond Fund April 30, 1998 Statement of Assets & Liabilities (Unaudited) Assets Investment in securities, at value (cos$14,607,661) $ 14,702,360 Dividends receivable 1,650 Interest receivable 298,611 Other receivables 108,724 -------------------- Total assets 15,111,345 Liabilities Payable for investments purchased 58,086 Accrued advisory fee 8,738 Dividends payable 99,651 ------------------ Total liabilities 166,475 -------------------- Net Assets $ 14,944,870 ==================== Net Assets consist of: Paid in capital $ 14,850,534 Accumulated undistributed net investment income (2,679) Accumulated undistributed net realized gain (loss) on investments 2,316 Net unrealized appreciation on investments 94,699 -------------------- Net Assets, for 1,489,746 shares $ 14,944,870 ==================== Net Asset Value Net Assets Offering price and redemption price per share ($14,944,870/1,489,746) $ 10.03 ====================
Florida Street Bond Fund April 30, 1998 Statement of Assets & Liabilities (Unaudited) Assets Investment in securities, at value (cos$14,607,661) $ 14,702,360 Dividends receivable 1,650 Interest receivable 298,611 Other receivables 108,724 -------------------- Total assets 15,111,345 Liabilities Payable for investments purchased 58,086 Accrued advisory fee 8,738 Dividends payable 99,651 ------------------ Total liabilities 166,475 -------------------- Net Assets $ 14,944,870 ==================== Net Assets consist of: Paid in capital $ 14,850,534 Accumulated undistributed net investment income (2,679) Accumulated undistributed net realized gain (loss) on investments 2,316 Net unrealized appreciation on investments 94,699 -------------------- Net Assets, for 1,489,746 shares $ 14,944,870 ==================== Net Asset Value Net Assets Offering price and redemption price per share ($14,944,870/1,489,746) $ 10.03 ====================
Florida Street Bond Fund Statement of Operations (Unaudited) for the six month period ended April 30, 1998 Investment Income Dividend Income $ 24,246 Interest Income 446,878 -------------------- Total Income 471,124 Expenses Advisory fee $ 39,227 -------------------- Total Expenses 39,227 -------------------- Net Investment Income 431,897 -------------------- Realized & Unrealized Gain (Loss) Net realized gain (loss) on investment securities (2,679) Change in net unrealized appreciation (depreciation) on investment securities 54,640 -------------------- Net gain (loss) 51,961 -------------------- Net increase (decrease) in net assets resulting $ 483,858 ==================== from operations
Florida Street Bond Fund Statement of Changes in Net Assets (Unaudited) For the six For the period months ended ended April 30, 1998 October 31, 1997 Increase in Net Assets Operations Net investment income $ 431,897 105,474 Net realized gain (loss) on securities transactions (2,679) (97,781) Change in net unrealized appreciation 54,640 40,059 ---------------- --------------- Net Increase in net assets resulting from operations 483,858 47,752 ---------------- --------------- Distributions to shareholders: From net investment income (429,616) (7,658) From net realized gain - - Return of capital - (97,781) ---------------- --------------- Total distributions (429,616) (105,439) Share Transactions Net proceeds from sale of shares 7,344,576 7,463,588 Shares issued in reinvestment 435,404 - Shares redeemed (178,360) (116,893) ---------------- --------------- Net increase in net assets resulting from share transactions 7,601,620 7,346,695 ---------------- --------------- Total increase in net assets 7,655,862 7,289,008 Net Assets Begining of period 7,289,008 - ---------------- --------------- End of period [including undistributed net investment income of $2,316 $ 14,944,870 7,289,008 ================ =============== an $35 respectively.]
Florida Street Bond Fund Financial Highlights For the six For the period months ended ended April 30, 1998 October 31, 1997 Selected Per Share Data Net asset value, beginning of period $9.95 $10.00 --------------- ------------- Income from investment operations Net investment income 0.38 0.21 Net realized and unrealized gain(loss) 0.08 (0.12) --------------- ------------- Total from investment operations 0.46 0.09 --------------- ------------- Less Distributions From net interest income (0.38) (0.02) From net realized gain(loss) 0.00 0.00 Return of capital 0.00 (0.12) --------------- ------------- --------------- ------------- Total distributions (0.38) (0.14) --------------- ------------- Net asset value, end of period $10.03 $9.95 Total Return 5.01(a) 3.69(a) Ratios and Supplemental Data Net assets, end of period (000) $14,945 $7,289 Ratio of expenses to average net assets 0.75(a) 0.53(a) Ratio of net investment income to average net assets 8.22(a) 3.95(a) Portfolio turnover rate 3.29% 60.55% Average commission rate 0.08207 0.0339 (a) Annualized (b) For the period August 4, 1997 (commencement of operations)
Florida Street Growth Fund Results as of April 30, 1998 Fund/Indices Six Months Life of Fund* Florida St. Growth Fund 9.5% 13.2% S&P Small Cap 600 Index 13.1% 16.0% S&p Mid Cap 400 Index 19.2% 18.7% S&P 500 Index 22.5% 17.1% - ------------------------------------------------------------------------ Fellow Shareholders, During the six months ended April 30, 1998, the Florida Street Growth Fund achieved a total return of 9.50%. Since the fund's inception on August 6, 1997, its return has been 13.2%. It is useful to compare this return to that of medium and small capitalization indexes due to the broad range of market cap in the fund's holdings. It is evident from the table above that the stock market continued to be led by large companies. During the last six months, the S&P 500 has outdistanced the S&P 600 by an astounding 9.4%. Your fund's returns trailed the general market for several reasons. The primary reason was the defensive stance we took following the fund's inception. We did not chase rapidly rising stocks, and we held reserves of 12-15% during much of the period. During the most recent months, we found few compelling purchase candidates. Additionally, we initiated and held positions in several energy service stocks such as Tuboscope, Pride International and Halter Marine which have exciting outlooks but whose performance suffered as investors worried about the effect of declining oil prices on the industry's backlog. We continue to hold these stocks which, we believe, offer compelling value. The recent price performance of this group has been encouraging as well. Overall, stock selection has had a positive effect on fund results. Among the best performers for the period were specialty retailers Dollar General and Goody's Family Clothing. They are 47% and 78% above your cost, respectively. Sales trends continue to look healthy at these companies. We are also very pleased with the investments made in the temporary staffing industry. You own three companies involved in the most dynamic segment of temporary staffing; information technology professionals. Accustaff, Cotelligent Group and Metamor Worldwide (formerly Corestaff) have all contributed positively to the fund's results. Your returns on cost are 23%, 32% and 27%, respectively. These companies are benefiting from Year 2000 spending by corporations and a growing trend toward outsourcing of many IT functions. There were some disappointments during the period. The most significant may have been the announcement by Cendant that accounting errors in a CUC International unit, which was recently merged into Cendant, would reduce earnings significantly. We continue to hold the stock, as we believe management is very capable and will make the merger a successful one. Another disappointing investment was Lone Star Technologies, a Manufacturer of oilfield tubular goods. Our purchase was ill-timed, as investors were becoming more concerned about declining oil prices, while we were focusing on the apparent value in a stock that had retreated significantly from its recenthigh price. We recognized our mistake and sold the stock. As the fund' advisor we continually search for ideas to enhance the fund's return and risk posture. We apply a diverse set of criteria which combine value, growth and momentum factors. Recent purchases include companies that are consolidating their industries such as ITEQ ( process and pollution control equipment), Eastern Environmental Services ( waste pickup), and Metals USA ( metals processing). Additions to the technology segment of the fund are Datastream Systems ( industrial automation software) and Harbinger Corp. ( electronic commerce services). We believe the fund is well positioned in numerous healthy and exciting businesses. Many of these companies are not well-followed by Wall Street, creating opportunities for capitalizing on trends that are not well known. The top ten holdings are listed in the table. We believe these issues have good prospects for above average returns. In total, they represent approximately one fifth of the fund's net asset value. Thank you for joining us as a fellow shareholder of the Florida Street Growth Fund. We will strive to justify the confidence you have placed in us. Richard Chauvin, Jr. CFA Portfolio Manager Florida Street Growth Fund Schedule of Investments -(Unaudited) April 30, 1998 Common Stock - 92.7% Shares Value Banks & Bank Holding Companies - 4.1% Carolina First Corp. 1,500 $ 43,500 CCB Financial Corp. 400 43,500 National Commerce Bancorporation 500 22,375 Norwest Corp. 600 23,812 --------------- 133,187 --------------- Capital Equipment & Services 6.0% Allied Signal Inc. 1,050 46,003 Deere & Co. 400 23,375 Illinois Tool Wks Inc. 400 28,200 Itec Inc (a) 1,800 22,950 Kuhlman Corp. 500 24,500 NCI Buildings Systems (a) 1,000 52,000 --------------- 197,028 --------------- Consumer Cyclicals 10.1% Action Performance (a) 900 31,163 Autozone Inc (a) 700 21,131 Consolidated Stores Corp (a) 1,100 44,000 Dollar General Corp. 625 23,672 Garden Ridge Corp. 1,100 21,037 Goody's Clothing Inc.(a) 750 37,125 Home Depot Inc. 400 27,850 Keystone automotive Inds. Inc. (a) 600 15,487 Movado Group Inc. 1,200 36,525 Palm Harbor Homes Inc. (a) 1,200 53,250 Proffitt's Inc. (a) 500 19,875 --------------- --------------- 331,115 --------------- Consumer Services 10.8% Accustaff Inc. (a) 1,100 39,462 Acxiom Corp. (a) 1,200 29,100 Billing Information Concepts (a) 1,300 36,400 Carnival Corp. Cl. A. 600 41,737 Cendant Corp.(a) 820 20,500 Eastern Environmental Svcs. Inc. (a) 2,700 70,537 Landry's Seafood Restaurants, Inc.(a) 1,000 28,500 Metamor Worldwide Inc.(a) 1,200 45,900 Piccadilly Cafeteria 1,000 13,188 Rare Hospitality Intl. Inc. (a) 2,200 28,600 --------------- --------------- 353,924 --------------- Consumer Non - Durables - 4.5% Flowers Industries 1,000 21,375 Pepsico, Inc. 500 19,844 Performance Food Group Co. (a) 900 18,225 Richfood Holdings 1,350 37,041 SCP Pool Corp. 2,050 48,431 --------------- 144,916 --------------- Florida Street Growth Fund Schedule of Investments -(Unaudited) - April 30, 1998 Energy Sector - 7.4% Core Laboratories(a) 1,200 $ 34,050 Friede Goldman (a) 700 28,175 Halter marine Corp (a) 600 10,875 Mitcham Industries Inc (a) 800 9,350 Mobil Corp. 300 23,700 Nabors Industries (a) 400 10,075 Newpark Resources Inc.(a) 1,600 38,500 Pride International Inc.(a) 750 18,234 Southern Mineral Inc.(a) 2,800 9,975 Superior Energy Services Inc. (a) 4,000 44,500 Tuboscope Vetco International Corp. (a) 600 14,213 --------------- 241,647 --------------- Financial Services - 14.3% Allied Capital Corp. 1,200 31,200 Amresco Inc. (a) 1,300 47,125 Capital RE 350 25,834 Federal National Mtg. (Fannie Mae) 1,000 59,875 Fleet Financial Group Inc. 350 30,231 Greentree Financial 600 24,450 Interstate/Johnson Lane 550 17,291 Lehman Brothers Holdings Inc. 200 14,212 MBNA Corp. 1,325 44,884 Protective Life Corp. 1,000 37,125 Raymond James Financial Inc. 750 24,422 Reliastar Financial Cos. 700 31,938 Sirrom Capital Corp. 1,600 47,800 SunAmerica Inc. 600 29,963 --------------- 466,350 --------------- Health Care - 4.1% Bristol-Myers Squibb co. 250 26,469 Cognizant Corp. 600 30,863 Diagnostic Health Services (a) 6,000 54,750 SmithKline beecham Plc Adr Cl A 200 11,913 Vencor Inc. (a) 400 10,850 --------------- --------------- 134,845 --------------- Natural Resources/Basic Materials - 4.3% IMC Global Inc. 600 21,600 Metals USA Inc.(a) 3,500 68,250 Nucor Corp. 500 29,969 PPG Industries 300 21,206 --------------- --------------- 141,025 --------------- Florida Street Growth Fund Schedule of Investments -(Unaudited) - April 30, 1998 Technology Sector - 13.8% Applied Materials, Inc. (a) 900 $ 32,512 Coherent Communication Corp.(a) 700 34,431 Compaq Computer Corp. 1,200 33,675 Compucom Systems Inc.(a) 3,100 23,250 Concord EFS Inc.(a) 900 28,350 Cotelligent Group Inc.(a) 1,300 33,556 Datastream Systems (a) 1,000 23,000 Harbinger Corp.(a) 800 29,100 PairGain Technology (a) 400 7,375 PMT Services Inc.(a) 1,200 23,400 Qlogic Corp. (a) 500 22,250 SCI Systems Inc.(a) 1,000 41,188 Tech Data (a) 1,000 49,875 World Access Inc.(a) 600 23,175 Xerox Corp. 400 45,400 --------------- 450,537 --------------- Transportation/Commercial - 2.0% ASA Hldgs Ins. 800 30,400 Skywest Inc. 400 16,200 Smithway Motor Express Corp. (a) 1,200 20,100 --------------- --------------- 66,700 --------------- Telecommunications - 4.3% Frontier Corp. 2,200 65,863 GTE Corp. 400 23,375 Premier Technologies (a) 800 25,500 Worldcom Inc.(a) 600 25,669 --------------- 140,407 --------------- Utilities 1.0 Consolidated Natural Gas Co. 550 31,625 --------------- Index Units 6.0% S & P 400 Mid-Cap Depository Receipts 2,700 195,328 --------------- Total Common Stock (Cost $2,655,756) $ 3,028,634 --------------- Money Market Securities - 8.2% Star Treasury 4.82% 12/31/98 (Cost $268,767) 268,767 --------------- Bonds .7% Premiere Technologies Cvt Bond 5.75%, 7/01/04 22,443 23,325 --------------- TOTAL INVESTMENTS - 101.6% (Cost $2,946,966) 3,320,726 =============== Other Assets less liabilities - -1.6% (52,682) Total Net Assets - 100.0% $ 3,268,044 =============== (a) non-income producing
Florida Street Growth Fund April 30, 1998 Statement of Assets & Liabilities (Unaudited) Assets Investment in securities, at value (cost $2,946,966) $ 3,320,726 Dividends receivable 1,314 Interest receivable 1,395 -------------------- Total assets 3,323,435 Liabilities Payable for investments purchased $ 51,875 Accrued advisory fee payable 3,516 ------------------- Total liabilities 55,391 -------------------- Net Assets 3,268,044 ==================== Net Assets consist of: Paid in capital $ 2,960,486 Accumulated undistributed net investment income 3,570 Accumulated undistributed net realized gain (loss) on investments (69,772) Net unrealized appreciation on investments 373,760 -------------------- Net Assets, for 288,691 shares $ 3,268,044 ==================== Net Asset Value Net Assets Offering price and redemption price per share ($3,268,044/288,691) $ 11.32 ====================
Florida Street Growth Fund Statement of Operations for the six month period ended April 30, 1998 (Unaudited) Investment Income Dividend Income $ 7,167 Interest Income 10,986 ------------------- Total Income 18,153 Expenses Advisory fee $ 13,242 ---------------------- Total Expenses 13,242 ------------------- Net Investment Income (Loss) 4,911 ------------------- Realized & Unrealized Gain (Loss) Net realized gain (loss) on investment securities (63,548) Change in net unrealized appreciation (depreciation) on investment securities 341,432 ---------------------- Net gain (loss) on investment securities 277,884 ------------------- Net increase (decrease) in net assets resulting from operations $ 282,795 ===================
Florida Street Growth Fund Statement of Changes in Net Assets (Unaudited) For the six For the period months ended August 6, 1997 April 30, 1998 to October 31,1997 (a) Increase in Net Assets Operations Net investment income $ 4,911 5,346 Net realized gain(loss) on securities transactions (63,548) (4,612) Change in net unrealized appreciation 341,432 32,328 ------------------ ------------------ Net Increase in net assets resulting from operations 282,795 33,062 ------------------ ------------------ Distributions to shareholders: From net investment income (2,075) - From net realized gain (6,224) - ------------------ ------------------ Total Distributions (8,299) - Share Transactions Net proceeds from sale of shares 1,017,382 2,127,711 Shares issued in reinvestment 8,299 - Shares redeemed (149,614) (43,292) ------------------ ------------------ Net increase in net assets resulting from share transactions 876,067 2,084,419 ------------------ ------------------ Total increase in net assets 1,150,563 2,117,481 Net Assets Begining of period 2,117,481 - ------------------ ------------------ End of period [including undistributed net investment income of $4,911 and $5,346]. $ 3,268,044 2,117,481 ================== ================== (a) Commencement of Operations
Florida Street Growth Fund Financial Highlights (Unaudited) For the period For the period Selected Per Share Data ended ended April 30, 1998 October 31, 1997 Net asset value, beginning of period $10.19 $10.00 ------------ ------------- Income from investment operations Net investment income 0.00 0.03 Net realized and unrealized gain (loss) 1.17 0.16 ------------ ------------- Total from investment operations 1.17 0.19 ------------ ------------- Less Distributions From net interest income (0.01) - From net realized gain (loss) (0.03) - ------------ ------------- Total Distributions (0.04) - ------------ ------------- Net asset value, end of period $11.32 $10.19 ============ ============= Total Return 23.29% 7.(a) Ratios and Supplemental Data Net assets, end of period (000) $3,268 $2,117 Ratio of expenses to average net assets 1.12(a) 1.355(a) Ratio of net investment income to average net assets 0.41(a) 1.14%(a) Portfolio turnover rate 9.57% 0.87% Average commissions paid 0.0967 0.0973 (a) Annualized (b) Commencement of Operations
FLORIDA STREET FUNDS Notes to Financial Statements April 30, 1998 NOTE 1. ORGANIZATION The Florida Bond Fund (the "Bond Fund") and the Florida Street Growth Fund (the "Growth Fund") were organized as series of the AmeriPrime Funds, an Ohio business trust (the "Trust"), on June 15, 1997, and commenced operations on August 4 and August 6, 1997, respectively. The Trust is registered under the Investment Company Act of 1940, as amended, as a diversified series, open end management investment company. The investment objective of the Bond Fund is to provide total return to shareholders over the long term. The investment objective of the Florida Street Growth Fund is to provide total return to its shareholders over the long term. 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 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. 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 of Trustees. 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. FLORIDA STREET FUNDS Notes to Financial Statements April 30, 1998 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 an annual 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. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Funds retain Commonwealth Advisors, Inc. (the "Adviser") to manage the Fund's investments. The Adviser is a Louisiana corporation. Walter A. Morales, the adviser's president and chief investment manager is responsible for the day to day management of the bond fund, Richard L. Chauvin, Senior Vice-President and Fund Manager of the adviser is responsible for the day to day management of the Growth Fund. 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, taxes, interest, fees and expenses of non-interested person trustees, and extraordinary expenses. As compensation for its management services and agreement to pay the Funds expenses, the Funds are obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 1.10% and 1.35% of the average daily net assets of the Bond Fund and the Growth Fund, respectively. It should be noted that most investment companies pay their own operating expenses directly, while the Funds expenses, except those specified above, are paid by the Adviser. For the period from November 1, 1997 through April 30, 1998, the Adviser received fees of $39,227 and $13, 242 from the Bond Fund and the Growth Fund, respectively. FLORIDA STREET FUNDS Notes to Financial Statements April 30, 1998 NOTE 4. CAPITAL SHARE TRANSACTIONS Florida Street Bond Fund. As of April 30, 1998 there was an unlimited number of no par value shares of capital stock authorized for the Fund. Paid in capital at April 30, 1998 was $14,948,315. Transactions in capital stock were as follows: For the six For the six For the period For the period months ended months ended ended ended April 30, 1998 April 30, 1998 October 31, 1997 October 31, 1997 (a) (a) Shares Dollars Shares Dollars Shares sold 731,204 $7,344,576 744,446 $7,463,588 Shares issued in reinvestment of dividends 43,535 435,404 0 0 Shares redeemed (17,717) (178,360) (11,722) (116,893) -------- --------- -------- --------- 757,022 $7,601,620 732,724 $7,346,695 (a) August 4, 1997 (commencement of operations) to October 31, 1998.
Florida Street Growth Fund. As of April 30, 1998, there was an unlimited number of no par value shares of capital stock authorized for the Fund. Paid in capital at April 30, 1998 was $2,960,486. Transactions in capital stock were as follows: For the six For the six For the period For the period months ended months ended ended ended April 30, 1998 April 30, 1998 October 31, 1997 October 31, 1997 (a) (a) Shares Dollars Shares Dollars Shares sold 94,097 $1,017,382 211,885 $2,127,711 Shares issued in reinvestment of dividends 23,609 8,299 0 0 Shares redeemed (36,718) (149,984) (4,179) (43,292) -------- --------- ------- -------- 80,988 $876,697 207,703 $7,346,695
FLORIDA STREET FUNDS Notes to Financial Statements April 30, 1998 NOTE 5. INVESTMENTS Florida Street Bond Fund. For the period from November 1, 1997, to April 30, 1998 purchases and sales of investment securities, other than short-term investments, aggregated $749,198 and $347,803, respectively. The gross unrealized appreciation for all securities totaled $330,572 and the gross unrealized depreciation for all securities totaled $235,873 for a net unrealized appreciation of $94,699. The aggregate cost of securities for federal income tax purposes at April 30, 1998 was $14,607,661. Florida Street Growth Fund. For the period from November 1, 1997 through April 30, 1998, purchases and sales of investment securities, other than short-term investments, aggregated $1,297,913 and $229,550, respectively. The gross unrealized appreciation for all securities totaled $434,700 and the gross unrealized depreciation for all securities totaled $60,940 for a net unrealized appreciation of $373,760. The aggregate cost of securities for federal income tax purposes at April 30, 1998 was $2,946,966. 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, 1997, Charles Schwab & Co. owned in aggregate more than 25% of the Fund. June 8, 1998 Dear Shareholder: After only seven weeks of managing the Marathon Value Fund, it seems much too soon to be writing our first shareholder letter; however, this is a great opportunity to welcome you as a fellow shareholder in the fund. The Fund began on March 9, 1998, with an NAV of $10.00. For the period from March 9, 1998 (commencement of operations), through April 30, 1998, the NAV grew to $10.32. Since inception, the Fund is up 3.2% versus a return of 4.7% for the Russell 2000 and 5.0% for the S&P 600 Smallcap Index. The largest part of the index's performance came during March while the fund was attempting to invest its cash. Conversely, the Fund did very well in April out-performing both the Russell 2000 and the S&P 600 Smallcap Index. Currently, small and mid-cap stocks are having a very difficult time keeping up with the performance of the larger, more liquid companies. The Dow Jones Industrials and the S&P 500 have been the investment of choice, and the smaller companies have suffered through several years of lagging performance. Contrary investors that we are, we see this as an opportunity, not a problem. The growing valuation differences between the large S&P stocks and the smaller stocks should make the stocks we invest in increasingly attractive. Although we enjoy seeing our stocks increase in value, sometimes a decline in prices creates opportunities. The recent turmoil in the markets has given us the opportunity to buy additional shares in companies at what we feel will turn out to be bargain prices. After buying shares in St. John Knits, Arctic Cat, and Adflex Solutions at higher prices in April and May, we were able to add to these positions at lower prices as new money entered the fund. This fund is intended for long-term "investors" and the week-to-week movement of our stocks, although sometimes wonderful and sometimes painful, is not our focus. When we purchase shares of a stock it is usually with the intention of holding the shares for several years as the business grows in value, or as other investors come to recognize the value that already exists. We feel we are investing in companies that will be worth significantly more in the future. On behalf of all the employees of Burroughs & Hutchinson, I would like to thank you for your investment in our fund. We are excited about the future of this fund and look forward to working with you in the future. Sincerely, Mark Matsko, CFA Portfolio Manager Marathon Value Fund Schedule of Investments - (Unaudited) - April 30, 1998
Common Stocks - 63.2% Shares Value Banks & Bank Holding Cos. - 4.3% California State Bank 1,000 $ 50,750 First Commerce Bancshares (a) 2,000 57,000 ------------------ ------------------ 107,750 ------------------ Business Equipment & Services - 9.6% Analysts International Corp. (a) 1,000 29,000 (John H.) Harland Co. 6,000 106,875 Olsten Corp. 7,700 105,394 ------------------ ------------------ 241,269 ------------------ Consumer Products (durables) - 4.8% QEP Co. (a) 5,000 45,000 Toro Co. 2,000 75,750 ------------------ ------------------ 120,750 ------------------ Consumer Products (non-durables) - 6.5% Food Lion Inc. - Class B 10,000 101,250 Morton International, Inc. 2,000 64,000 ------------------ ------------------ 165,250 ------------------ Computers & Peripherals - 3.8% Adflex Solutions, Inc. (a) 3,200 69,600 Datum Inc. (a) 1,500 25,125 ------------------ ------------------ 94,725 ------------------ Financial Services - 5.4% Bear Stearns Companies Inc. 1,000 57,062 United Asset Management Corp. 3,000 79,500 ------------------ ------------------ 136,562 ------------------ Healthcare Products - 9.4% Ballard Medical Products 2,000 50,250 Corvel Corp. (a) 1,500 53,437 EMPI, Inc. (a) 4,000 80,000 Vencor Inc. (a) 2,000 54,250 ------------------ ------------------ 237,937 ------------------ Manufacturing - Electrical - 4.5% Woodhead Industries, Inc. 6,000 112,500 ------------------ Measuring Equipment - 2.8% Lecroy Corp. (a) 1,500 34,875 Thermospectra Corp. (a) 4,000 36,250 ------------------ ------------------ 71,125 ------------------ Marathon Value Fund Schedule of Investments - (Unaudited) - April 30, 1998 Common Stocks - continued Shares Value Oil & Gas Services - 1.2% Maverick Tube Corp. (a) 1,000 $ 17,438 Patterson Energy Inc. (a) 1,000 14,000 ------------------ ------------------ 31,438 ------------------ Recreational Vehicles - 4.0% Artic Cat. Inc. (a) 10,100 101,000 ------------------ Restaurants - 1.3% Schlotzsky's Inc. (a) 2,000 32,000 ------------------ Transportation - 5.6% Arnold Industries Inc. 6,100 97,600 Trico Marine Services, Inc. (a) 2,000 45,250 ------------------ ------------------ 142,850 ------------------ ================== TOTAL COMMON STOCKS (Cost $1,542,859) $ 1,595,156 ================== Money Market Securities - 39.6% Principal Amount Star Treasury 4.83%, 12/31/98 (Cost: $999,375) $ 999,375 $ 999,375 ------------------ ------------------ TOTAL INVESTMENTS - % (Cost $2,542,234) $ 2,594,531 ------------------ ------------------ Liabilities less other assets - (2.8%) (71,232) ------------------ ================= TOTAL NET ASSETS - 100.0% $ 2,523,299 ================== (a) non-income producing security
Marathon Value Fund April 30, 1998 Statement of Assets & Liabilities (Unaudited)
Assets Investment in securities, at value (cost $2,542,234) $ 2,594,531 Receivable for invesments sold 83,725 Dividends receivable 620 Interest receivable 3,922 -------------------- Total assets 2,682,798 Liabilities Payable for investments purchased $ 157,296 Accrued investment advisory fee payable 2,203 ------------------- Total liabilities 159,499 -------------------- Net Assets $ 2,523,299 ==================== Net Assets consist of: Paid in capital $ 2,459,118 Accumulated undistributed net investment income 4,009 Accumulated undistributed net realized gain 7,875 Net unrealized appreciation on investments 52,297 -------------------- Net Assets, for 244,517 shares $ 2,523,299 ==================== Net Asset Value Net Assets Offering price and redemption price per share ($2,523,299/244,517) $ 10.32 ====================
Marathon Value Fund Statement of Operations for the period March 12, 1998 (Commencement of Operations) to April 30, 1998 (Unaudited) Investment Income Dividend Income $ 740 Interest Income 6,240 ------------------- Total Income 6,980 Expenses Investment advisory fee $ 2,971 ------------------- Total Operating Expenses 2,971 ------------------- Net Investment Income (Loss) 4,009 ------------------- Realized & Unrealized Gain Net realized gain on investment securities 7,875 Change in net unrealized appreciation on investment securities 52,297 ------------------- ------------------- Net gain (loss) on investment securities 60,172 ------------------- Net increase in net assets resulting from operations $ 64,181 ===================
Marathon Value Fund Statement of Changes in Net Assets (Unaudited) for the period March 12, 1998 (commencement of operations) to April 30, 1998 Increase/(Decrease) in Net Assets Operations Net investment income (loss) $ 4,009 Net realized gain 7,875 Change in net unrealized appreciation 52,297 --------------- Net Increase in net assets resulting from operations 64,181 --------------- Distributions to shareholders: From net investment income - --------------- Share Transactions Net proceeds from sale of shares 2,459,118 Shares issued in reinvestment - Shares redeemed - --------------- Net increase in net assets resulting from share transactions 2,459,118 --------------- Total increase in net assets 2,523,299 Net Assets Beginning of period - --------------- End of period [including undistributed net investment income of $4,009] $ 2,523,299 ===============
Marathon Value Fund Financial Highlights (Unaudited) for the period March 12, 1998 (Commencement of Operations) to April 30, 1998 Selected Per Share Data Net asset value, beginning of period $10.00 ------------ Income from investment Operations Net investment income 0.03 Net realized and unrealized gain (loss) 0.29 ------------ Total from investment operations 0.32 ------------ Less Distributions From net interest income - From net realized gain - ------------ Net asset value, end of period $10.32 ============ Total Return 23.36(a) Ratios and Supplemental Data Net assets, end of period (000) $2,523 Ratio of expenses to average net assets 1.44(a) Ratio of net investment income to average net assets 1.94(a) Portfolio turnover rate 41.76(a) Average commissions paid 0.0631 (a) Annualized MARATHON VALUE FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 (Unaudited) NOTE 1. ORGANIZATION The Marathon Value Fund. (the "Fund") was organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust"), on March 9, 1998 and commenced operations on March 12, 1998. The Trust 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 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 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. 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 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 Adviser, subject to review of the Board of Trustees. 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 April 30, 1998 (Unaudited) 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 an annual 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. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains Burroughs & Hutchinson, Inc. (the "Adviser") to manage the Fund's investments. Mark Matsko, 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. As compensation for its management services the Fund is obligated to pay the Adviser 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. For the period from March 12, 1998 through April 30, 1998, the Adviser has received a fee of $2,971 from the Fund. 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 period ended April 30, 1998, the Administrator received fees of $2,500 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 fund shares, there were not any payments made to the Distributor for the six month period ended April, 30, 1998. Certain members of management of the Administrator and the Distributor are also members of management of the AmeriPrime Trust. MARATHON VALUE FUND NOTES TO FINANCIAL STATEMENTS April 30, 1998 (Unaudited) NOTE 4. CAPITAL SHARE TRANSACTIONS As of April 30, 1998 there was an unlimited number of no par value shares of capital stock authorized for the Fund. Paid in capital at April 30, 1998 was $2,459,118. Transactions in capital stock were as follows: For the period from March 12, 1998 (Commencement of Operations) through April 30, 1998 Shares Amount - --------- ---------- Shares sold 244,517 $2,459,118 Shares issued in reinvestment of dividends - - Shares redeemed - - ----------- -------------- Net increase 244,517 $2,459,118 ====== ======== NOTE 5. INVESTMENTS For the period from March 12, 1998 (commencement of operations) through April 30, 1998, purchases and sales of investment securities, other than short-term investments, aggregated $1,618,709 and $93,938, respectively. The gross unrealized appreciation for all securities totaled $75,762 and the gross unrealized depreciation for all securities totaled $23,462 for a net unrealized appreciation of $52,300. The aggregate cost of securities for federal income tax purposes at April 30, 1998 was $2,542,234. 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. -----END PRIVACY-ENHANCED MESSAGE-----