N-30D 1 ariston30d.txt AMERIPRIME FUNDS A R I S T O N ------------------------------------------------------------------------------- Ariston Capital Management Corporation 40 Lake Bellevue Drive Suite 220 Bellevue, Washington 98005 Telephone (425) 454-1600 Fax (425) 455-2534 ARISTON CONVERTIBLE SECURITIES FUND ANNUAL REPORT Dear Fellow Shareholders: We are very pleased to present to you our Fund's annual report for the fiscal year 2000. Listed below are some performance comparisons for the periods ended December 31, 2000: 1 3 Years Year Annualized Ariston Convertible Securities Fund -14.76% +19.74% Lipper Convertible Fund Average +0.46% +11.27% Standard & Poor's 500 Stock Index (unmanaged) -9.11% +12.26% NASDAQ Stock Composite Index (unmanaged) -39.29% +16.53% Russell 2000 Stock Index (unmanaged) -3.15% 4.60% Lehman Gov./Credit Bond Index (unmanaged) +11.84% +6.21% 5 Years 10 Years ------- -------- Annualized Annualized Ariston Convertible Securities Fund +15.30% +15.62% Lipper Convertible Fund Average +13.10% +14.28% Standard & Poor's 500 Stock Index (unmanaged) +18.33% +17.46% NASDAQ Stock Composite Index (unmanaged)* +19.00% +21.72% Russell 2000 Stock Index (unmanaged)* +10.28% +15.52% Lehman Gov./Credit Bond Index (unmanaged) +6.23% +8.00% *includes reinvestment of dividends
Date Ariston Lehman Brothers Russell 2000 Convertible Government Index Securities Fund Credit Bond Index $40,690 $23,375 $33,953 1989 4th Quarter 10,000 10,000 10,000 1990 1st Quarter 10,083 9,886 9,779 2nd Quarter 10,656 10,241 10,155 3rd Quarter 9,192 10,302 7,663 4th Quarter 9,662 10,827 8,049 1991 1st Quarter 11,500 11,118 10,443 2nd Quarter 11,866 11,285 10,281 3rd Quarter 12,785 11,932 11,120 4th Quarter 14,015 12,568 11,756 1992 1st Quarter 13,821 12,380 12,638 2nd Quarter 13,119 12,881 11,776 3rd Quarter 14,065 13,511 12,113 4th Quarter 15,812 13,521 13,922 1993 1st Quarter 16,351 14,151 14,515 2nd Quarter 15,272 14,577 14,831 3rd Quarter 16,387 15,061 16,128 4th Quarter 16,846 15,017 16,552 1994 1st Quarter 16,236 14,544 16,111 2nd Quarter 15,926 14,364 15,483 3rd Quarter 16,604 14,435 16,558 4th Quarter 17,066 14,489 16,250 1995 1st Quarter 17,656 15,210 16,999 2nd Quarter 17,946 16,198 18,592 3rd Quarter 19,365 16,507 20,428 4th Quarter 20,245 17,276 20,872 1996 1st Quarter 21,342 16,872 21,936 2nd Quarter 20,821 16,951 23,033 3rd Quarter 21,846 17,250 23,111 4th Quarter 21,234 17,777 24,313 1997 1st Quarter 20,176 17,624 23,056 2nd Quarter 22,245 18,266 26,793 3rd Quarter 24,146 18,905 30,780 4th Quarter 24,028 19,512 29,749 1998 1st Quarter 26,051 19,809 32,739 2nd Quarter 25,319 20,328 31,210 3rd Quarter 21,258 21,334 24,924 4th Quarter 24,532 21,364 28,990 1999 1st Quarter 24,691 21,107 27,415 2nd Quarter 28,987 20,877 31,678 3rd Quarter 28,509 20,986 29,676 4th Quarter 47,741 20,900 35,057 2000 1st Quarter 52,363 21,460 37,539 2nd Quarter 46,498 21,771 36,120 3rd Quarter 52,073 22,396 36,474 4th Quarter 40,690 23,375 33,953 Sources: Lipper Analytical Services, Inc. & Wiesenberger, a Thomson Financial Company. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than at original cost. Total return represents past performance and is not predictive of future results. The year 2000 will be remembered as a bear market year for the various stock averages. The Standard & Poor's 500 Index's yearly loss was the most severe since 1977. It fell 17% from its yearly high to its yearly low, and it closed at the same level as twenty-one months previous. The technology weighted NASDAQ Composite was brutalized, falling 39%. This was the worst yearly performance in its history dating from its inception in 1971. It lost an amazing 54% from its yearly closing high to its yearly closing low. November was really horrible, with the NASDAQ falling 23%, its second worst month in history behind the October 1987 crash loss of 27%. The strongest and most fundamentally attractive companies will usually resist much of the selling pressure until late in a bear market. Finally, they too will succumb to the downdraft in an emotionally wracked selling climax. This is the capitulation phase that ends the bear market. This is what happened to our Fund's investments in the last months of the year negatively impacting its yearly performance. Now for the good news, there is a high probability that a new bull market started in early January 2001. We believe this because at the end of November our stock market composite risk-forecasting model turned bullish and continues to be extremely bullish. This model has a real-time track record that dates from the beginning of 1978. The few times in its history that it turned extremely bullish all occurred near very important market lows that were all followed by cyclical bull markets. When in this classification, the broad stock market has had annualized positive price returns above 30%, and stock prices have always been significantly higher twelve months later. We believe that the investing environment currently is one of the five best periods in the past 20 years. It is extremely important to remember that historically the most bullish investment environments exist when the quantity of money (money supply) is increasing rapidly and the cost of money (interest rates) is dropping rapidly. We are now in one of those periods. We have kept our portfolios invested in companies that are profitable leaders in rapid growth industries. These companies all have franchises that are difficult, if not impossible, to duplicate and that have high barriers to entry for competitors. Many of these companies are in select areas of technology and health sciences. A number of these investments are also positions in the Ariston Internet Convertible Fund (please review its respective shareholder message.) We believe these investments will be some of the new leaders of the new bull market. Through the use of these companies' convertible securities, some of the downside volatility associated with growth stock investing is dampened. We appreciate your support and confidence in us. We will continue to work hard for our communal investment success. We always welcome the opportunity to discuss any question you may have about your investment. Sincerely, Richard B. Russell President January 2001
Ariston Convertible Securities Fund Schedule of Investments - December 31, 2000 Principal CONVERTIBLE BONDS - 78.6% Amount Value Abrasive Asbestos Misc Nonmetallic Mineral Products - 3.9% Corning, 0.00%, 11/08/2015 1,020,000 734,400 ----------------- Biologicial Products - 7.5% Genzyme Corp. 5.25%, 06/01/2005 595,000 1,420,563 ----------------- Computer Communications Equipment - 5.8% Juniper Networks, Inc. 4.75%, 03/15/2007 1,050,000 1,095,937 ----------------- Computer Services/Data Processing - 3.5% Automatic Data Processing, Inc. 0.00%, 02/20/2012 400,000 660,000 ----------------- Computer Storage Devices - 5.2% Veritas Software Corp. 1.856%, 08/13/2006 380,000 979,450 ----------------- Electronic Components - 4.5% Celestica, Inc., 0.00%, 08/01/2020 2,000,000 865,000 ----------------- Pharmaceutical Preparations - 10.4% Elan (Athena Neurosciences) Corp. PLC 4.75%, 11/15/2004 (b) 115,000 154,104 Elan (Athena Neurosciences) Corp. PLC 4.75%, 11/15/2004 535,000 716,916 Genentech (Roche Holdings) Inc., 0.00% 01/19/2015 (b) 1,200,000 1,101,000 ----------------- 1,972,020 ----------------- Printed Circuit Boards - 5.4% Sanmina 4.25%, 05/01/2004 550,000 1,023,688 ----------------- Semiconductors & Related Devices - 9.1% International Rectifier Corp. 4.25%, 07/15/2007 (b) 1,000,000 671,250 Transwitch Corp. 4.50%, 09/12/2005 (b) 1,200,000 1,062,000 ----------------- 1,733,250 ----------------- Services Computer Programing Services - 13.9% BEA Systems, Inc. 4.00%, 12/15/2006 (b) 800,000 1,777,000 Wind River Systems, Inc. 5.00%, 08/01/2002 775,000 860,250 ----------------- 2,637,250 ----------------- Services - Prepackaged Software - 9.4% i2 Technologies 5.25%, 12/15/2006 540,000 885,600 Rational Software Corp. 5.00%, 02/01/2007 (b) 700,000 904,750 ----------------- 1,790,350 ----------------- TOTAL CONVERTIBLE BONDS (Cost $13,036,420) 14,911,908 ----------------- COMMON STOCKS - 30.3% Shares Value Computer Storage Devices - 7.4% EMC Corp. (a) 13,838 920,227 Chiron Corp. (a) 10,703 476,283 ----------------- 1,396,510 ----------------- Ariston Convertible Securities Fund Schedule of Investments - December 31, 2000 Common stocks - continued Radio & TV Broadcasting & Communications - 8.3% Qualcomm, Inc. (a) 19,269 $ 1,583,671 ----------------- Semiconductors & Related Devices - 10.8% Analog Devices Inc. (a) 40,000 2,047,500 ----------------- Telephone & Telegraph Apparatus - 3.8% Alcatel Sponsored ADR 13,000 727,187 ----------------- TOTAL COMMON STOCKS (Cost $2,511,902) 5,754,868 ----------------- CALL Options - 0.8% Shares Subject to Call Value NASDAQ 100 @ 70 Expires 1/19/02 7,500 69,375 NASDAQ 100 @ 70 Expires 1/18/03 5,500 77,000 ----------------- (Cost $242,026) 146,375 ----------------- TOTAL INVESTMENTS - 109.7% (Cost $15,790,348) 20,813,151 ----------------- Other assets less liabilities - (9.7)% (1,847,194) ----------------- TOTAL NET ASSETS - 100.0% $ 18,965,957 ================= (a) Non-income producing (b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, to qualified institutional buyers. At December 31, 2000 the value of these securities amounted to $5,670,104 or 29.89% of net assets. See accompanying notes which are an integral part of the financial statements.
Ariston Convertible Securities Fund December 31, 2000 Statement of Assets & Liabilities Assets Investment in securities (cost $15,790,348) $ 20,813,151 Interest receivable 102,712 Receivable from administrator 6,695 Receivable for investments sold 199,167 ------------------ Total assets 21,121,725 Liabilities Payable to custodian bank 2,106,107 Accrued investment advisory fee 42,966 Federal income taxes payable 6,695 ------------------ Total liabilities 2,155,768 ------------------ Net Assets $ 18,965,957 ================== Net Assets consist of: Paid in capital 14,430,256 Accumulated net realized loss on investments (487,102) Net unrealized appreciation on investments 5,022,803 ------------------ Net Assets $ 18,965,957 ================== Net Asset Value Net Assets Offering price and redemption price per share ($18,965,957 / 890,129 ) $ 21.31 ================== See accompanying notes which are an integral part of the financial statements.
Ariston Convertible Securities Fund Statement of Operations for the year ended December 31, 2000 Investment Income Dividend income $ 70,836 Accretion of discount 54,151 Interest income 395,575 Amortization of premium (532,012) --------------- Total Income (11,450) --------------- Expenses Investment advisory fee 523,322 Other Expenses 6,695 Trustee fees 2,547 --------------- Total operating expenses 532,564 Expense reimbursement (6,695) --------------- Net expenses 525,869 --------------- Net Investment Loss (537,319) --------------- Realized & Unrealized Gain (Loss) Net realized gain (loss) on investment securities (354,274) Change in net unrealized appreciation (depreciation) on investment securities (3,997,844) --------------- Net realized and unrealized gain (loss) on investment securities (4,352,118) --------------- Net decrease in net assets resulting from operations $(4,889,437) =============== See accompanying notes which are an integral part of the financial statements.
Ariston Convertible Securities Fund Statement of Changes in Net Assets Year Year Ended Ended December 31, December 31, 2000 1999 -------------------- ----------------- Increase (Decrease) in Net Assets Operations Net investment income (loss) $ (537,319) $ (58,599) Net realized gain (loss) on investment securities (354,274) 2,712,344 Change in net unrealized appreciation (depreciation) (3,997,844) 5,198,325 -------------------- ----------------- Net increase (decrease) in net assets resulting from operations (4,889,437) 7,852,070 Distributions to shareholders From net realized gain (172) (2,573,485) -------------------- ----------------- Share Transactions Net proceeds from sale of shares 22,820,048 3,785,062 Shares issued in reinvestment of distributions 172 2,474,563 Shares redeemed (14,924,574) (5,963,596) -------------------- ----------------- Net increase in net assets resulting from share transactions 7,895,646 296,029 -------------------- ----------------- Total increase in net assets 3,006,037 5,574,614 Net Assets Beginning of period 15,959,920 10,385,306 -------------------- ----------------- End of period $ 18,965,957 $ 15,959,920 ==================== ================= See accompanying notes which are an integral part of the financial statements.
Ariston Convertible Securities Fund Financial Highlights Years Ended December 31, ------------ ----------- ------------ ------------ ----------- 2000 1999 (a) 1998 1997 1996 ------------ ----------- ------------ ------------ ----------- Selected Per Share Data Net asset value, beginning of period $ 25.00 $ 15.36 $ 15.08 $ 13.66 $ 13.66 ------------ ----------- ------------ ------------ ----------- Income from investment operations: Net investment income (loss) (0.58) (0.11) 0.00 0.11 0.11 Net realized and unrealized gain (loss) on investments (3.11) 14.49 0.31 1.68 0.55 ------------ ----------- ------------ ------------ ----------- Total from investment operations (3.69) 14.38 0.31 1.79 0.66 ------------ ----------- ------------ ------------ ----------- Less distributions: Distributions from net investment income 0.00 0.00 0.00 (0.11) (0.11) Distributions from net realized gains 0.00 (4.74) (0.03) (0.26) (0.55) ------------ ----------- ------------ ------------ ----------- Total distributions 0.00 (4.74) (0.03) (0.37) (0.66) ------------ ----------- ------------ ------------ ----------- Net asset value, end of period $ 21.31 $ 25.00 $ 15.36 $ 15.08 $ 13.66 ============ =========== ============ ============ =========== Total Return (14.76)% 94.61% 2.09% 13.16% 4.89% Ratios and Supplemental Data Net assets, end of period (000) $18,966 $15,960 $10,385 $10,345 $11,208 Ratio of expenses to average net assets 2.25% 2.10% 2.32% 2.38% 2.39% Ratio of expenses to average net assets before reimbursement 2.28% Ratio of net investment income to average net assets (2.30)% (0.59)% (0.13)% 0.79% 0.77% Ratio of net investment income to average net assets before reimbursement (2.33)% Portfolio turnover rate 47.83% 32.89% 27.79% 30.47% 18.45% (a) See note 1 of the Notes to the Financial Statements. See accompanying notes which are an integral part of the financial statements.
A R I S T O N -------------------------------------------------------------------------------- Ariston Capital Management Corporation 40 Lake Bellevue Drive Suite 220 Bellevue, Washington 98005 Telephone (425) 454-1600 Fax (425) 455-2534 ARISTON INTERNET CONVERTIBLE FUND ANNUAL REPORT Dear Fellow Shareholders: We are very pleased to present to you the first annual report for our new Fund. Because our Fund began operations on May 1, 2000, it has only eight months of performance history to report. Listed below are some comparisons through December 31, 2000: Since May 1,2000 Inception Ariston Internet Convertible Fund - Elite -22.90% Ariston Internet Convertible Fund - Premier -23.50% NASDAQ Stock Composite Index (unmanaged)* -35.92% AMEX Internet Stock Index (unmanaged) -45.42% Dow Jones Internet Stock Index (unmanaged) -54.47% *includes reinvestment of dividends Ariston Internet Convertible Fund Elite Shares Ariston AMEX NASDEQ Dow Jones Internet Internet Stock Internet Convertible Stock Composite Stock Securities Index Index Index Fund,Elite $ 7,710 $ 5,458 $ 6,408 $ 4,551 5/1/00 9,600 10,000 10,000 10,000 5/31/00 8,517 8,225 8,810 8,013 6/30/00 9,114 9,669 10,276 9,608 7/31/00 8,782 9,491 9,761 8,870 8/31/00 10,323 10,789 10,901 10,729 9/30/00 10,168 9,810 9,520 9,567 10/31/00 9,226 8,569 8,735 7,649 11/30/00 7,705 6,157 6,736 4,904 12/31/00 7,344 5,458 6,408 4,551 Ariston Internet Convertible Fund Premier Shares Ariston Internet AMEX Internet NASDAQ Stock Dow Jones Convertible Stock Composite Internet Securities Fund Index Index Stock Index Premier $ $7.344 $ 5,458 $ 6,408 $ 4,551 5/1/00 9,600 10,000 10,000 10,000 5/31/00 8,517 8,225 8,810 8,013 6/30/00 9,114 9,669 10,276 9,608 7/31/00 8,782 9,491 9,761 8,870 8/31/00 10,323 10,789 10,901 10,729 9/30/00 10,168 9,810 9,520 9,567 10/31/00 9,226 8,569 8,735 7,649 11/30/00 7,705 6,157 6,736 4,904 12/31/00 7,344 5,458 6,408 4,551 Sources: Lipper Analytical Services, Inc. & Wiesenberger, a Thomson Financial Company. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than at original cost. Total return represents past performance and is not predictive of future results. Obviously, the year 2000 will be remembered as a bear market for the various stock averages. Since its inception in 1971, the technology weighted NASDAQ Composite Index had its worst performance in history. However, going forward, we believe the investment outlook has turned extremely positive. (Please review our shareholder message for the Ariston Convertible Securities Fund.) We believe that the Internet is the largest investment opportunity of our lifetime! The enormous upside potential for the stock market in general, and the Internet sector in particular, was recently summarized in a statement made by EMC Corporation's CEO, Michael C. Ruettgers. EMC is the supreme company in high-end data storage, the top performing stock on the NYSE for the 1990's, and an important investment position in our Fund. Mr. Ruettgers said he believes that the Internet will be the driving force that will create $80 trillion in stock market value by 2010. By contrast, current total U.S. stock valuation is approximately $12.5 trillion. He believes that Internet infrastructure companies "are in the best position to deliver the best returns of the newly emerging Internet age." More recently, International Business Machine's CEO, Lou Gerstner, was quoted in a published interview saying, "Inside IBM, we talk about 10 times more connected people, 100 times more network speed, 1,000 times more devices and a million times more data . . . The infrastructure technology that exists today isn't ready - it can't handle what's coming." Despite the collapse of many dot-com companies and the plunge in technology stocks, the technology economy will boom in 2001, says the research firm International Data Corp. They predict worldwide information technology spending will pass $1 trillion in 2001 and Internet commerce will top $500 billion. Another research firm, The Boston Consulting Group, predicts that by 2010, business-to-business E-commerce could generate productivity gains equivalent to 6% of sales, or roughly $1 trillion. The Internet sector presents enormous opportunities, but also very high risks, all with stomach churning volatility. Our Fund is the first, and only, Internet sector fund to offer the relative stability of convertible securities. We have always used convertible securities to dampen some of the downside volatility associated with growth stock investing. Our Fund's investments are heavily focused on relatively high quality, profitable franchise companies with next generation technology vital to the build-out of the Internet. Our investments are most heavily weighted in infrastructure equipment companies, their dominant component suppliers, and the application software companies that tie all the hardware together to make the Internet work. The Internet infrastructure build-out is in its infancy and the thirst for bandwidth is far from being satisfied. We believe the least viable part of the Internet sector is the end game of the network: the speculative dot-com type companies in E-retailing, and we are avoiding these companies. Our investments are in companies that have unique growth franchises that are difficult, if not impossible to duplicate, and that have substantial barriers to entry for competitors. We appreciate your support and confidence. We always welcome the opportunity to discuss any questions you may have about your investment. Sincerely, Richard B. Russell President January 2001
Ariston Internet Convertible Fund Schedule of Investments - December 31, 2000 Principal CONVERTIBLE BONDS - 81.9% Amount Value Abrasive Asbestos Misc Nonmetallic Mineral Products - 4.4% Corning Inc., 0.00%, 11/8/2015 45,000 $ 32,400 --------------- Business Services - 5.0% Critical Path 5.75%, 4/01/2005 25,000 16,938 Redback Networks Corp. (b) 5.00%, 4/01/2007 35,000 20,344 --------------- 37,282 --------------- Commercial Services - 7.7% Checkfree Holdings Corp., 6.50%, 12/01/2006 (b) 30,000 27,000 Getty Images, Inc., 5.00%, 03/15/2007 (b) 40,000 30,450 --------------- 57,450 --------------- Computer Communications Equipment - 4.2% Juniper Networks, Inc., 4.75%, 03/15/2007 30,000 31,313 --------------- Electronic Components - 4.4% Celestica Inc., 0.00%, 8/01/2020 75,000 32,438 --------------- Printed Circuit Boards - 5.0% Sanmina Corp. 4.25%, 05/01/2004 20,000 37,225 --------------- Printed Circuit Boards - Manufacturing - 3.9% Park Electrochemical Corp. 5.50%, 3/01/2006 25,000 29,406 --------------- Semiconductors & Related Devices - 15.1% Texas Instruments, Inc., (Burr-Brown Corp.) 20,000 26,900 4.25%, 2/15/2007 Transwitch Corp., 30,000 26,550 4.50%, 9/12/2005 (b) TriQuint Semiconductor, Inc., 4.00%, 03/01/2007 (b) 35,000 30,625 Vitesse Semiconductor Corp., 4.00%, 03/15/2005 (b) 35,000 28,131 --------------- 112,206 --------------- Semiconductors & Related Devices Manufacturing - 2.7% International Rectifier Corp., 4.25%, 7/15/2007 (b) 30,000 20,137 --------------- Services, Computer Programming Services - 9.0% BEA Systems, Inc., 4.00%, 12/15/2006 (b) 20,000 44,425 Wind River Systems, Inc., 5.00%, 08/01/2002 20,000 22,200 --------------- 66,625 --------------- Services, Prepackaged Software - 20.5% i2 Technologies, Inc., 5.25%, 12/15/2006 25,000 41,000 Mercury Interactive Corporation, 4.75%, 7/01/2007 (b) 25,000 28,000 Rational Software Corp., 5.00%, 2/01/2007 (b) 25,000 32,312 Veritas Software Corp, 1.856%, 8/13/06 20,000 51,550 --------------- 152,862 --------------- TOTAL CONVERTIBLE BONDS (Cost $671,272) 609,344 --------------- Ariston Internet Convertible Fund Schedule of Investments - December 31, 2000 - continued CONVERTIBLE PREFERRED STOCKS - 2.5% Shares Value Telecommunications Global Crossing, Ltd., 6.75% 125 $ 18,269 --------------- TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $33,500) 18,269 --------------- COMMON STOCKS - 9.5% Computer Equipment / Storage - 6.4% EMC Corp. (a) 714 47,481 --------------- Telephone & Telegraph Apparatus - 3.1% Alcatel Sponsored ADR 409 22,878 --------------- TOTAL COMMON STOCKS (Cost $79,079) 70,359 --------------- CALL Options - 1.2% Shares Subject to Call Value NASDAQ 100 @ 70 Expires 1/19/02 4,000 3,700 NASDAQ 100 @ 70 Expires 1/18/03 4,000 5,600 --------------- (Cost $15,356) 9,300 --------------- Principal Amount Value Money Market Securities - 4.3% Firstar Treasury Fund, 5.29% (c) (Cost $25,048) 25,048 25,048 --------------- TOTAL INVESTMENTS - 99.4% (Cost $824,255) 732,320 --------------- Other assets less liabilities - 0.6% 11,707 --------------- TOTAL NET ASSETS - 100.0% $ 744,027 =============== (a) Non-income producing (b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, to qualified institutional buyers. At December 31, 2000, the value of these securities amounted to $287,974 or 38.70% of net assets. (c) Variable rate security; the coupon rate shown represents the rate at December 31, 2000. See accompanying notes which are an integral part of the financial statements.
Ariston Internet Convertible Fund December 31, 2000 Statement of Assets & Liabilities Assets Investment in securities (cost $824,255) 732,320 Cash 5,971 Interest receivable 6,669 Dividends receivable 527 ------------------ Total assets 745,487 Liabilities Accrued investment advisory fee payable 1,368 Accrued 12b-1 fees Premier Shares 92 ------------------ Total liabilities 1,460 ------------------ Net Assets $ 744,027 ================== Net Assets consist of: Paid in capital 907,773 Accumulated net realized loss on investments (71,811) Net unrealized depreciation on investments (91,935) ------------------ Net Assets $ 744,027 ================== Net Asset Value Elite Shares Net Asset Value and Offering price and redemption price per share ($665,885/ 86,380) $ 7.71 ================== Premier Shares Net Asset Value and Redemption price per share ($78,142 / 10,209) $ 7.65 ================== Maximum offering price per share ($7.65/ 0.96) $ 7.97 ================== See accompanying notes which are an integral part of the financial statements.
Ariston Internet Convertible Fund Statement of Operations for the period May 1, 2000 (commencement of operations) through December 31, 2000 Investment Income Dividend Income $ 2,094 Interest Income 13,508 Accretion of Discount 2,799 Amortization of Premium (17,464) --------------- Total Income 937 Expenses Investment advisory fee 9,531 12b-1 fees Premier Shares (see note 3) 380 Trustee fees 811 --------------- Total operating expenses 10,722 --------------- Net Investment Loss (9,785) --------------- Realized & Unrealized Gain (Loss) Net realized loss on investment securities (71,811) Change in net unrealized appreciation (depreciation) on investment securities (91,935) --------------- Net loss on investment securities (163,746) --------------- Net decrease in net assets resulting from operations $ (173,531) =============== See accompanying notes which are an integral part of the financial statements.
Ariston Internet Convertible Fund Statement of Changes in Net Assets Period ended December 31, 2000 (a) ----------------------------- Increase (Decrease) in Net Assets Operations Net investment loss $ (9,785) Net realized loss on investment securities (71,811) Change in net unrealized appreciation/(depreciation) (91,935) ----------------- Net decrease in net assets resulting from operations (173,531) Distributions to shareholders From net investment income: Elite Shares 0 Premier Shares 0 From net realized gain: Elite Shares 0 Premier Shares 0 ----------------- Total distributions 0 ----------------- Share Transactions Net proceeds from sale of shares: Elite Shares 836,112 Premier Shares 99,286 Shares issued in reinvestment of distributions: Elite Shares 0 Premier Shares 0 Shares redeemed: Elite Shares (17,840) Premier Shares 0 ----------------- Net increase in net assets resulting from share transactions 917,558 ----------------- Total increase in net assets 744,027 Net Assets Beginning of period 0 ----------------- End of period $ 744,027 ================= (a) May 1, 2000 (commencement of operations) through December 31, 2000 See accompanying notes which are an integral part of the financial statements.
Ariston Internet Convertible Fund Financial Highlights Elite Shares Period ended December 31, 2000 (a) ---------------------- Selected Per Share Data Net asset value, beginning of period $ 10.00 --------------- Income from investment operations: Net investment loss (0.13) Net realized and unrealized gain (loss) on investments (2.16) --------------- Total from investment operations (2.29) --------------- Less distributions: Distributions from net investment income 0.00 Distributions from net realized gains 0.00 --------------- Total distributions 0.00 --------------- Net asset value, end of period $ 7.71 =============== Total Return (22.90)%(b) Ratios and Supplemental Data Net assets, end of period (000) $666 Ratio of expenses to average net assets 2.25% (c) Ratio of net investment income to average net assets (2.06)(c) Portfolio turnover rate 40.64% (c) (a) May 1, 2000 (commencement of operations) through December 31, 2000. (b) For a period of less than a full year, the total return is not annualized. (c) Annualized See notes which are an integral part of the financial statements. Ariston Internet Convertible Fund Financial Highlights Premier Shares Period ended December 31, 2000 (a) ---------------------- Selected Per Share Data Net asset value, beginning of period $ 10.00 --------------- Income from investment operations: Net investment loss (0.17) Net realized and unrealized gain (loss) on investments (2.18) --------------- Total from investment operations (2.35) --------------- Less distributions: Distributions from net investment income 0.00 Distributions from net realized gains 0.00 --------------- Total distributions 0.00 --------------- Net asset value, end of period $ 7.65 =============== Total Return (23.50)%(b) Ratios and Supplemental Data Net assets, end of period (000) $78 Ratio of expenses to average net assets 2.95% (c) Ratio of net investment income to average net assets (2.65%)(c) Portfolio turnover rate 40.64% (c) (a) May 1, 2000 (commencement of operations) through December 31, 2000. (b) For a period of less than a full year, the total return is not annualized. (c) Annualized See accompanying notes which are an integral part of the financial statements. Ariston Funds Notes to Financial Statements December 31, 2000 NOTE 1. ORGANIZATION Ariston Convertible Securities Fund (the "Convertible Securities Fund") and Ariston Internet Convertible Fund (the "Internet Convertible Fund"), (collectively the "Funds"), were organized as diversified series of the AmeriPrime Funds (the "Trust") on February 24, 1999 and February 29, 2000, respectively. On April 30, 1999, the Convertible Securities Fund acquired the assets and assumed the liabilities of Lexington Convertible Securities Fund (the "Predecessor Fund") in a tax-free reorganization. The Predecessor Fund commenced operations on January 20, 1988. The Internet Convertible Fund commenced operations on May 1, 2000. The Trust is established under the laws of Ohio by an Agreement and Declaration of Trust dated August 8, 1995 (the "Trust Agreement"). The investment objective of each Fund is total return. The Trust Agreement permits the Board of Trustees (the "Board") to issue an unlimited number of shares of beneficial interest of separate series without par value. The Board of Directors (the "Board") has authorized that shares of the Internet Convertible Fund may be offered in two classes: Premier Shares and Elite Shares. Each Class is subject to different expenses and a different sales charge structure. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by each Fund in the preparation of its financial statements. Securities Valuations - Common stocks, which are traded on any exchange, are valued at the last quoted sale price. Lacking a last sale price, a security is valued at the mean between the last bid and ask price except when, in the Advisor's opinion, the mean price does not accurately reflect the current value of the security. When market quotations are not readily available, when the Advisor determines the mean price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Advisor, in conformity with guidelines adopted by and subject to review and oversight of the Board of the Trust. All other securities generally are valued at the mean between the last bid and ask price, but may be valued on the basis of prices furnished by a pricing service when the Advisor believes such prices accurately reflect the fair market value of such securities. Convertible securities are valued at the greater of the value determined as described in the preceding sentence and the value of the shares of common stock into which the securities are convertible (determined as described in the preceding paragraph). If the Advisor decides that a price provided by the pricing service does not accurately reflect the fair market value of the securities, when market quotations are not readily available, when prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Advisor, in conformity with guidelines adopted by and 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 - Each Fund intends to qualify each year as a "regulated investment company" under the Internal Revenue Code of 1986, as amended. By so qualifying, each 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. The Convertible Securities Fund incurred a federal income tax expense of $6,695 for the year ended December 31, 2000. This amount was reimbursed by the administrator. Dividends and Distributions - Each Fund intends to distribute substantially all of its net investment income as dividends to its shareholders on a quarterly basis. Each Fund intends to distribute its net long-term capital gains and its net short-term capital gains at least once a year. Ariston Funds Notes to Financial Statements December 31, 2000 - continued NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued Securities Transactions & Investment Income - Each 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. During market conditions that cause the underlying common stocks of a convertible security to greatly increase in value, the aggregate amortization of premium can exceed interest income and the aggregate accretion of discount at levels that may cause the Funds to recognize negative income. Other- Generally accepted accounting principles require that permanent financial reporting tax differences relating to shareholder distributions be reclassified to paid in capital for both the Convertible Securities Fund and the Internet Convertible Fund. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Funds retain Ariston Capital Management Corporation (the "Advisor") to manage each Fund's investments. The Advisor was founded in 1977. Richard B. Russell, President and controlling shareholder of the Advisor, is primarily responsible for the day-to-day management of each Fund's portfolio. Under the terms of each Fund's management agreement (the "Agreements"), the Advisor manages the Fund's investments subject to approval of the Board and pays all of the expenses of the Fund except brokerage fees and commissions, taxes, borrowing costs (such as (a) interest and (b) dividend expenses on securities sold short), fees and expenses of non-interested person trustees, and extraordinary expenses. As compensation for its management services and agreement to pay each Fund's expenses, the Convertible Securities Fund is obligated to pay the Advisor a fee computed and accrued daily and paid monthly at an annual rate of 2.25% of the average value of daily net assets of the Fund, less 12b-1 expenses and fees and expenses of the non-interested person Trustees. The Internet Convertible Fund is obligated to pay the Advisor a fee computed and accrued daily and paid monthly at an annual rate of 2.25% of the average value of daily net assets of the Fund, less fees and expenses of the non-interested person Trustees. It should be noted that most investment companies pay their own operating expenses directly, while the Fund's expenses, except those specified above, are paid by the Advisor. For the year ended December 31, 2000, the Advisor received fees of $523,322 from the Convertible Securities Fund. For the period May 1, 2000 (commencement of operations) through December 31, 2000, the Advisor received fees of $9,531 from the Internet Convertible Fund. Each Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940 Act (each, a "Plan"). The Plan for the Convertible Securities Fund permits the Fund to pay directly, or reimburse the Advisor or Distributor, for distribution expenses in an amount not to exceed 0.25% of the average daily net assets of the Fund. Expenses of the Convertible Securities Fund were not affected by the 12b-1 Plan because the Fund's Advisor has not activated the Plan. The Plan for the Internet Convertible Fund, which relates only to the Premier class of shares, permits the Fund to pay directly, or reimburse the Advisor or Distributor, for distribution expenses in an amount not to exceed 0.70% of the average daily net assets of the Premier class of shares. For the period May 1, 2000 (commencement of operations) through December 31, 2000, the Premier shares of the Internet Convertible Fund paid $380 in 12b-1 fees incurred by the Fund. Ariston Funds Notes to Financial Statements December 31, 2000 - continued NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued Effective October 12, 2000, AmeriPrime Financial Services, Inc. and Unified Fund Services, Inc., both wholly owned subsidiaries of Unified Financial Services, Inc., merged with one another. Prior to the merger, AmeriPrime Financial Services, Inc. served as Administrator to the Funds. The result of this merger is now Unified Fund Services, Inc., ("Unified"), still a wholly owned subsidiary of Unified Financial Services, Inc. A Trustee and the officers of the Trust are members of management and/or employees of Unified. The Funds retain Unified to manage the Fund's business affairs and provide the Funds with administrative, transfer agency, and fund accounting services, including all regulatory reporting and necessary office equipment and personnel. The Advisor paid all administrative, transfer agency, and fund accounting fees on behalf of each Fund per the management agreement. Prior to December 31, 2000, the Funds retained AmeriPrime Financial Securities, Inc., to act as the principal distributor of their shares. Effective December 31, 2000, AmeriPrime Financial Securities, Inc. sold substantially all of its assets to Unified Financial Securities, Inc. Both companies are wholly owned subsidiaries of Unified Financial Services, Inc. Effective December 31, 2000, the Funds retained Unified Financial Securities, Inc. to act as the principal distributor of their shares. There were no payments made to either distributor during the fiscal year ended March 31, 2001. A Trustee and officer of the Trust may be deemed to be an affiliate of AmeriPrime Financial Securities, Inc. and Unified Financial Securities, Inc. NOTE 4. SHARE TRANSACTIONS Convertible Securities Fund. As of December 31, 2000, there were an unlimited number of authorized shares for the Fund. Paid in capital at December 31, 2000 was $14,430,256. Transactions in shares were as follows: For the year ended December 31, 2000 Shares Dollars Shares sold 863,158 22,820,048 Shares issued in reinvestment 7 172 Shares redeemed (611,558) (14,924,574) --------------------- ----------------- 251,607 7,895,646 ======= =========
Ariston Funds Notes to Financial Statements December 31, 2000 - continued NOTE 4. SHARE TRANSACTIONS - continued Internet Convertible Fund. As of December 31, 2000, there were an unlimited number of authorized shares for the Fund. Paid in capital at December 31, 2000 was $907,773. Transactions in Elite Shares were as follows:
For the period May 1, 2000 (Commencement of Operations) through December 31, 2000 Shares Dollars Shares sold 88,468 836,112 Shares issued in reinvestment 0 0 Shares redeemed (2,088) (17,840) ------- -------- 86,380 818,272 ====== ======= ======= =========
Transactions in Premier Shares were as follows: For the period May 1, 2000 (Commencement of Operations) through December 31, 2000 Shares Dollars Shares sold 10,209 99,286 Shares issued in reinvestment 0 0 Shares redeemed 0 0 - - 10,209 99,286 ====== ====== ======= =========
NOTE 5. INVESTMENTS Convertible Securities Fund. For the year ended December 31, 2000, purchases and sales of investment securities, other than short-term investments, aggregated $20,197,315 and $10,028,323, respectively. As of December 31, 2000, the gross unrealized appreciation for all securities totaled $6,511,119 and the gross unrealized depreciation for all securities totaled $1,488,316 for a net unrealized appreciation of $5,022,803. The aggregate cost of securities for federal income tax purposes at December 31, 2000 was $15,790,348. Internet Convertible Fund. For the period May 1, 2000 (commencement of operations) through December 31, 2000, purchases and sales of investment securities, other than short-term investments, aggregated $1,048,032 and $162,349, respectively. As of December 31, 2000, the gross unrealized appreciation for all securities totaled $20,263 and the gross unrealized depreciation for all securities totaled $112,198 for a net unrealized depreciation of $91,935. The aggregate cost of securities for federal income tax purposes at December 31, 2000 was $824,255. Ariston Funds Notes to Financial Statements December 31, 2000 - continued NOTE 6. ESTIMATES Preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 7. RELATED PARTY TRANSACTIONS The Advisor is not a registered broker-dealer of securities and thus does not receive commissions on trades made on behalf of each Fund. The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of December 31, 2000, Charles Schwab & Co., Inc. held for the benefit of others, in aggregate, more than 35% of the Convertible Securities Fund. As of December 31, 2000, Ariston Capital Management Corp. beneficially owned, in aggregate, more than 27% of the Internet Convertible Fund Elite shares. As of December 31, 2000, Investec Ernst & Co. beneficially owned, in aggregate, more than 98% of the Internet Convertible Fund Premier shares. INDEPENDENT AUDITOR'S REPORT To The Shareholders and Board of Trustees Ariston Convertible Securities Fund: We have audited the accompanying statement of assets and liabilities of Ariston Convertible Securities Fund, including the schedule of portfolio investments, as of December 31, 2000, and the related statement of operations for the year then ended, and the statement of changes in net assets and financial highlights for the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The financial highlights for the three years ended December 31, 1998, were audited by other auditors whose report dated February 19, 1999, expressed an unqualified opinion. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of investments and cash held by the custodian as of December 31, 2000, by correspondence with the custodian and brokers. An audit also included assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Ariston Convertible Securities Fund as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets for the two years in the period then ended, and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. McCurdy & Associates CPA's, Inc. Westlake, Ohio January 18, 2001