-----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, LeQatvgSD5meeKSqJgS9QQ06CD8aoAKXn8Eteqn9cYx4azZ/P+icZrZanFLLkD22 3awGv/mqS2h26hl9tj6qJA== 0001035449-01-500059.txt : 20010601 0001035449-01-500059.hdr.sgml : 20010601 ACCESSION NUMBER: 0001035449-01-500059 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010531 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: 1651526 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 martinandcolumbia.txt AMERIPRIMEFUNDSTRUST
COLUMBIA PARTNERS Equity Fund Dear Fellow Shareholders: We are writing to report the investment results for the Columbia Partners Equity Fund. The Fund in the six month period since we last reported to you, October 1, 2000 to March 31, 2001, was down 31.95% and for the past twelve months ending March 31, 2001, was down 33.94%. The Fund's investment results are compared to the unmanaged S&P 500 Index and the Russell 2000 Index in the table and chart below. - Returns for Periods Ending March 31, 2001 - Average Annual Return Since 1st Quarter Last 6 Inception Fund/Index 2001 Months 1 Year (March 31, 1999) - ---------- ---- ------ ------ ---------------- Columbia Partners Equity Fund -17.05% -31.95% -33.94% 7.99% S&P 500 -11.85% -18.74% -21.67% -3.88% Russell 2000 -6.51% -12.96% -15.33% 7.81% Growth of $10,000 investment made on 3/31/99 Date Columbia Partners S & P Russell 2000 Equity Fund Index Index 3/31/99 $10,000.00 $10,000.00 $10,000.00 4/30/99 10,590.00 10,387.25 10,896.09 5/31/99 10,380.00 10,142.31 11,055.26 6/30/99 10,980.00 10,704.73 11,555.16 7/31/99 11,110.00 10,370.80 11,238.13 8/31/99 10,890.00 10,319.48 10,822.18 9/30/99 10,940.00 10,036.91 10,824.54 10/31/99 11,520.00 10,671.80 10,868.39 11/30/99 12,750.00 10,888.73 11,517.35 12/31/99 13,879.53 11,529.64 12,821.12 1/31/00 13,961.84 10,950.43 12,615.21 2/29/00 17,079.33 10,743.34 14,698.43 3/31/00 17,655.50 11,793.69 13,729.35 4/28/00 16,410.56 11,439.00 12,903.16 5/31/00 15,546.31 11,204.18 12,151.15 6/30/00 16,245.94 11,480.43 13,210.42 7/31/00 16,153.34 11,301.09 12,785.41 8/31/00 18,097.92 12,002.65 13,760.92 9/30/00 17,141.06 11,369.15 13,356.46 10/31/00 16,235.65 11,320.93 12,760.27 11/30/00 12,994.70 10,429.04 11,450.40 12/29/00 14,061.06 10,480.20 12,433.79 1/31/01 15,029.93 10,851.81 13,081.11 2/28/01 13,067.35 9,862.95 12,222.83 3/31/01 11,663.73 9,238.22 11,624.93 The Columbia Partners Equity Fund's historical results are net of all expenses, and assume reinvestment of dividends and capital gains since March 31, 1999 (commencement of operations), versus the gross market benchmarks (the S&P 500 Index and the Russell 2000 Index), which assume all dividends are reinvested. When trying to achieve benchmark returns, investment management fees, transaction costs and execution costs will be incurred. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
Review & Outlook The equity markets declined precipitously since our last letter to Columbia Partners Equity Fund shareholders six months ago. After five years of optimism and rising stock prices, markets in the U.S. and around the world began to falter late in 2000 and continued through the first quarter of 200l. For the six-month period ending March 31, 2001, the S&P 500 declined 18.74%, the small-cap Russell 2000 Index declined 12.96 %, and the NASDAQ declined 49.90%. The markets' sell-off has been in response to the very rapid slowdown in economic activity and the resulting deterioration in realized and anticipated corporate earnings. The source of greatest difficulty for the Columbia Partners Equity Fund has been the technology sector. As the economy has slowed, spending for computer hardware, software and related services has slowed at a much more dramatic rate. Diminishing economic activity has also negatively affected the once fast growing telecommunications sector, as new orders for semiconductor and switching equipment have virtually come to a halt. While earnings estimates have been reduced significantly across the board, the price declines have swept the baby out with the bath water. Many companies have intact business models, good balance sheets and leading market positions. And while renewed spending may not benefit the same companies as in the previous cycle, businesses and individual consumers will probably continue to use cell phones, the Internet and computers. Technology products that allow companies to cut costs most likely will always be in demand, even in a tough environment, and we believe we own the leading technology and telecommunications companies in the Columbia Partners Equity Fund and thus are overweighted in this group. We are also emphasizing energy stocks, which have held up rather well in this carnage. We believe that we are still in the early stages of a multi-year drilling cycle because natural gas demand will exceed natural gas supply, assuming normal weather patterns. While gas prices may not go back to the $10 per mcf level of last December, energy companies will do very well at $4-$5 per mcf. We believe the Federal Reserve is the key to economic revival, and the Fed has lowered interest rates four times in the past four months. The equity market has a history of responding favorably to Federal Reserve easing. Since l975, there have been seven periods where the Fed has cut rates at least three times in a row. Although past performance is not an indication of future results, on average, the Dow Jones Industrial Average rose 10% within six months and 25% within one year of the third easing. The NASDAQ has done even better with average gains of 17% and 40%, respectively. The stock market sectors that have generally responded first to economic recovery are the financial and consumer cyclical areas. For that reason we are investing in these two areas with holdings such as Citigroup and JP Morgan Chase in the financial sector and Target and Wal-Mart in the consumer group. We will continue to look for the best equity investments for the Columbia Partners Equity Fund based on prospective earnings growth, valuation, and quality considerations. Very truly yours, Terence W. Collins President
Columbia Partners Equity Fund Schedule of Investments - March 31, 2001 Common Stock - 93.0% Shares Value Air Transportation, Scheduled - 2.4% Northwest Airlines Corporation - Class A (a) 18,585 420,486 ----------------- Bottled & Canned Soft Drinks Carbonated Waters - 1.5% Coca-Cola Co. 5,825 263,057 ----------------- Computer Communications Equipment - 1.5% Emulex Corp. (a) 10,560 198,660 Juniper Networks, Inc. (a) 1,740 66,050 ----------------- 264,710 ----------------- Computer Peripheral Equipment, NEC - 0.6% Cisco Systems, Inc. (a) 6,035 95,428 ----------------- Drilling Oil & Gas Wells - 7.2% ENSCO International, Inc. 14,610 511,350 Nabors Industries, Inc. (a) 13,835 717,206 ----------------- 1,228,556 ----------------- Electronic & Other Electrical Equipment (No Computer Equipment) - 2.0% General Electric Co. 8,045 336,767 ----------------- Fire, Marine & Casualty Insurance - 2.2% Citigroup, Inc. 8,334 374,863 ----------------- Ice Cream & Frozen Desserts - 2.7% Suiza Foods Corp. (a) 9,540 458,779 ----------------- Industrial Inorganic Chemicals - 4.9% Georgia Gulf Corp. 48,095 837,334 ----------------- Motor Vechicle Parts & Accessories - 2.2% Gentex Corp. (a) 15,985 369,653 ----------------- National Commercial Banks - 2.8% Hibernia Corporation - Class A 33,650 470,090 ----------------- Oil, Gas Field Services, NBC - 5.4% BJ Services Co. (a) 9,805 698,116 Schlumberger Limited 3,740 215,461 ----------------- 913,577 ----------------- Pharmaceutical Preparations - 8.9% American Home Products Corp. 5,295 311,081 Johnson & Johnson 4,060 355,128 Pfizer, Inc. 8,755 358,517 Shire Pharmaceutical Group Plc. (a) (c) 11,150 487,812 ----------------- 1,512,538 ----------------- Columbia Partners Equity Fund Schedule of Investments - March 31, 2001 Common Stocks - continued Shares Value Retail - Grocery Stores - 3.0% Safeway, Inc. (a) 9,315 $ 513,722 ----------------- Retail - Lumber & Other Building Materials Dealers - 2.0% Home Depot, Inc. 8,100 349,110 ----------------- Retail - Variety Stores - 5.7% Costco Wholesale Corp.(a) 7,060 277,105 Target Corp. 11,295 407,523 Wal-Mart Stores, Inc. 5,645 285,073 ----------------- 969,701 ----------------- Retail - Women's Clothing Stores - 5.7% Chico's FAS, Inc. (a) 29,825 978,633 ----------------- Security Brokers, Dealers & Flotation Companies - 2.2% Merrill Lynch & Co., Inc. 6,810 377,274 ----------------- Semiconductors - 7.5% Broadcom Corp. - Class A (a) 3,225 93,203 Cree, Inc. (a) 8,950 133,982 Intel Corp. 6,175 162,480 Micron Technology, Inc. 12,015 498,983 TranSwitch Corp. (a) 14,510 190,444 Vitesse Semiconductor Corp. (a) 8,330 198,358 ----------------- 1,277,450 ----------------- Services - Computer Integrated Systems Designs - 3.3% Jack Henry & Associates 21,180 501,701 Network Appliance, Inc. (a) 3,710 62,374 ----------------- 564,075 ----------------- Services - Employment Agencies - 2.7% Robert Half International, Inc. (a) 20,420 456,387 ----------------- Services - Prepackaged Software - 8.0% Ariba, Inc. (a) 4,835 38,227 Brocade Communications Systems, Inc. (a) 7,520 157,093 Microsoft Corp. (a) 6,000 328,125 Rational Software Corp. (a) 16,660 295,715 VERITAS Software Corp. (a) 4,559 210,808 Wind River Systems, Inc. (a) 14,105 327,941 ----------------- 1,357,909 ----------------- Services - Specialty Outpatient Facilities, NEC - 2.6% Orthodontic Centers of America, Inc. (a) 21,765 446,182 ----------------- State Commerical Banks - 1.5% J.P. Morgan Chase & Co. 5,847 262,530 ----------------- Water Transportation - 4.5% Trico Marine Services, Inc. (a) 50,780 761,700 ----------------- Total Common Stock (Cost $18,662,341) 15,860,511 ----------------- Columbia Partners Equity Fund Schedule of Investments - March 31, 2001 Principal Value Value Money Market Securities - 8.2% Firstar Treasury Fund, 8.2% (b) (Cost $1,408,688) 1,408,688 $ 1,408,688 ----------------- TOTAL INVESTMENTS (Cost $20,071,029) - 101.2% 17,269,199 ----------------- Other assets less liabilities - (1.2)% (206,256) ----------------- Total Net Assets - 100.0% $17,062,943 ================= (a) Non-income producing (b) Variable rate security; the coupon rate shown represents the rate at March 31, 2001. (c) American Depository Receipt See accompanying notes which are an integral part of the financial statements.
Columbia Partners Equity Fund March 31, 2001 Statement of Assets & Liabilities Assets Investment in securities (cost $20,071,029) $ 17,269,199 Dividends receivable 7,280 Interest receivable 5,021 Receivable for fund shares sold 969 ------------------ Total assets 17,282,469 Liabilities Payable to custodian $ 892 Accrued investment advisory fee 18,634 Payable for fund shares purchased 200,000 ------------------ Total liabilities 219,526 Net Assets $ 17,062,943 ================== Net Assets consist of: Paid-in capital 21,923,467 Accumulated undistributed net realized loss on investments (2,058,694) Net unrealized depreciation on investments (2,801,830) ------------------ Net Assets, for 1,818,088 shares $ 17,062,943 ================== Net Asset Value Offering price and redemption price per share ($17,062,943 / 1,818,088 ) $ 9.39 ================== See accompanying notes which are an integral part of the finanacial statements.
Columbia Partners Equity Fund March 31, 2001 Statement of Operations Investment Income: Dividends $ 78,024 Interest 112,359 ------------------- Total investment income 190,383 ------------------- Expenses: Investment advisory fee 265,271 Trustees' fees 2,117 ------------------- Total expenses before reimbursement 267,388 Reimbursed expenses (2,117) ------------------- Total operating expenses 265,271 ------------------- Net Investment Income (Loss) (74,888) ------------------- Realized and Unrealized Gain (Loss) on Investments: Net realized gain (loss) on investment securities (1,996,309) Net change in net unrealized depreciation on investment securities (6,580,093) ------------------- Net realized and unrealized loss on investments (8,576,402) ------------------- Increase (Decrease) in Net Assets from Operations $ (8,651,290) =================== See accompanying notes which are an integral part of the finanacial statements.
Columbia Partners Equity Fund Statement of Changes in Net Assets For the year For the year ended ended Increase in Net Assets March 31, 2001 March 31, 2000 Operations Net investment income (loss) $ (74,888) (34,929) Net realized gain (loss) on investment securities (1,996,309) 3,818,020 Change in net unrealized appreciation (depreciation) (6,580,093) 3,778,263 ----------------- --------------------- Net increase (decrease) in net assets resulting from operations (8,651,290) 7,561,354 ----------------- ---------------------- Distributions to shareholders From net investment income 0 0 From net realized gain (3,423,606) (421,869) ------------------ ---------------------- Total distributions (3,423,606) (421,869) ------------------- ---------------------- Share Transactions Net proceeds from sale of shares 3,590,870 17,229,187 Shares issued in reinvestment of distributions 3,423,460 421,869 Shares redeemed (1,916,848) (750,184) ------------------ ------------------------ Net increase (decrease) in net assets resulting from share transactions 5,097,482 16,900,872 ------------------ ------------------------ Total increase (decrease) in net assets (6,977,414) 24,040,357 ------------------ ------------------------ Net Assets Beginning of period 24,040,357 0 ------------------- ------------------------ End of period [including accumulated undistributed net investment loss of $74,888 and $34,929, respectively] $ 17,062,943 $ 24,040,357 =================== ========================= Capital Share Transactions Shares sold 260,779 1,426,414 Shares issued in reinvestment of distributions 307,037 30,997 Shares repurchased (150,284) (56,855) ------------------- -------------------------- Net increase from capital transactions 417,532 1,400,556 =================== ========================== See accompanying notes which are an integral part of the finanacial statements.
Columbia Partners Equity Fund Financial Highlights Year Year ended ended March 31, March 31, 2001 2000 ---------------- ------------------ Selected Per Share Data Net asset value, beginning of period $ 17.16 $ 10.00 ---------------- ------------------ Income from investment operations Net investment loss (0.05) (0.04) Net realized and unrealized gain (loss) (5.41) 7.59 ---------------- ------------------ Total from investment operations (5.46) 7.55 ---------------- ------------------ Less distributions From net investment income 0.00 0.00 From net realized gain (2.31) (0.39) ---------------- ------------------ Total distributions (2.31) (0.39) ---------------- ------------------ Net asset value, end of period $ 9.39 $ 17.16 ================ ================== Total Return (33.94)% 76.56% Ratios and Supplemental Data Net assets, end of period (000) $17,063 $24,040 Ratio of expenses to average net assets 1.20% 1.20% Ratio of expenses to average net assets before reimbursement 1.21% 1.22% Ratio of net investment income (loss) to average net assets (0.34)% (0.31)% Ratio of net investment income (loss) to average net assets before reimbursement (0.35)% (0.34)% Portfolio turnover rate 67.93% 215.08% See accompanying notes which are an integral part of the finanacial statements.
Columbia Partners Equity Fund Notes to Financial Statements March 31, 2001 NOTE 1. ORGANIZATION Columbia Partners Equity Fund (the "Fund") was organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust"), on February 2, 1999 and commenced operations on April 1, 1999. The Trust is established under the laws of Ohio by an Agreement and Declaration of Trust dated August 8, 1995, (the "Trust Agreement"). The Fund is registered under the Investment Company Act of 1940, as amended, as a diversified open-end series of the Trust. The Fund's 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 Valuations- Securities, which are traded on any exchange or on the NASDAQ over-the-counter market, are valued at the last quoted sale price. Lacking a last sale price, a security is valued at its last bid price except when, in the Advisor's opinion, the last bid price does not accurately reflect the current value of the security. All other securities for which over-the-counter market quotations are readily available are valued at their last bid price. When market quotations are not readily available, when the Advisor determines the last bid price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Advisor, in conformity with guidelines adopted by and subject to review of the Board of Trustees of the Trust (the "Board"). Fixed income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Advisor believes such prices accurately reflect the fair market value of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. When prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Advisor, in conformity with guidelines adopted by and subject to review of the Board. Short-term investments in fixed-income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value. 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 at least 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. Generally accepted accounting principles require that permanent financial reporting tax differences relating to shareholder distributions be reclassified to paid-in capital. Columbia Partners Equity Fund Notes to Financial Statements March 31, 2001 - continued NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued The Fund retains Columbia Partners, L.L.C. (the "Advisor") to manage the Fund's investments. The Advisor was organized in 1995, as an independent limited liability company owned 50% by its employees and 50% by Galway Capital Management, L.L.C., a venture capital firm. A team of the Advisor makes the investment decisions for the Fund, which is primarily responsible for the day-to-day management of the Fund's portfolio. Under the terms of the management agreement, (the "Agreement"), the Advisor manages the Fund's investments subject to approval of the Board of Trustees and pays all of the expenses of the Fund except brokerage fees and commissions, taxes, interest, fees and expenses of non-interested person trustees, and extraordinary expenses. As compensation for its management services and agreement to pay the Fund's expenses, the Fund is obligated to pay the Advisor a fee of 1.20% of the average daily net assets of the Fund. It should be noted that most investment companies pay their own operating expenses directly, while the Fund's expenses, except those specified above, are paid by the Advisor. For the fiscal year ended March 31, 2001, the Advisor earned a fee of $265,271 from the Fund. The Advisor has contractedly agreed to permanently reimburse fees and other expenses of the trustees to the extent necessary to maintain total operating expenses at the rate of 1.20%. For the fiscal year ended March 31, 2001, the Advisor reimbursed expenses of $2,117. 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 Fund. 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 Fund retains Unified to manage the Fund's business affairs and provide the Fund 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 the Fund per the management agreement. Prior to December 31, 2000, the Fund retained Ameriprime Financial Securities, Inc. to act as the principle distributor of its 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 Fund retained Unified Financial Securities, Inc. to act as the principal distributor of its 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. INVESTMENTS For the fiscal year ended March 31, 2001, purchases and sales of investment securities, other than short-term investments, aggregated $18,558,244 and $13,399,959, respectively. As of March 31, 2001, the gross unrealized appreciation for all securities totaled $1,914,019 and the gross unrealized depreciation for all securities totaled $4,715,849 for a net unrealized appreciation of $2,801,830. The aggregate cost of securities for federal income tax purposes at March 31, 2001 was $18,686,171. Columbia Partners Equity Fund Notes to Financial Statements March 31, 2001 - continued NOTE 5. 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. INDEPENDENT AUDITOR'S REPORT To The Shareholders and Board of Trustees Columbia Partners Equity Fund (a series of the AmeriPrime Funds) We have audited the accompanying statement of assets and liabilities of the Columbia Partners Equity Fund, including the schedule of portfolio investments, as of March 31, 2001, and the related statement of operations for the year then ended, the statement of changes in net assets, and the financial highlights for each of the two years then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with 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 March 31, 2001, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Columbia Partners Equity Fund as of March 31, 2001, the results of its operations for the year then ended, the statement of changes in net assets, and the financial highlights for each of the two years then ended, in conformity with accounting principles generally accepted in the United States of America. McCurdy & Associates CPA's, Inc. Westlake, Ohio 44145 April 17, 2001
April 20, 2001 Dear Fellow Shareholders, Over the past year the Martin Capital U.S. Opportunity Fund has suffered along with the NASDAQ, which has endured the worst sell-off since the creation of the index in 1971. The broader markets also have suffered significant damage. The U.S. Opportunity Fund lost 54.9% for the fiscal year ended March 31, 2001, after increasing 61.9% the previous fiscal year. The S&P 500 lost 21.7% during the Fund's fiscal year ended March 31, 2001, after increasing 17.3% during the Fund's prior fiscal year. While this performance has been disappointing, we believe the Fund is positioned to take full advantage of a market rebound. The key to great long-term performance is maintaining a consistent approach to investing. With the U.S. Opportunity Fund, we have built a portfolio of high quality growth companies possessing the potential for superior earnings growth in an expanding and growing global economy. We have maintained this approach throughout the market downturn and we will continue to maintain this approach for the foreseeable future. As we stated in last year's annual report: "This strategy may tend to impact short-term performance during times of weakness in growth stocks... therefore, we are unlikely to participate in systematic market-timing strategies, as that would ultimately harm our long-term performance." As it turns out, our short-term performance was affected; however, our long-term outlook remains bullish. By maintaining exposure to the market, we believe our shareholders have the best opportunity to realize the potential rewards of market appreciation over time. Economic Outlook U.S. economic growth has been slowing since the first quarter of last year. The biggest surprise has been the speed at which the downturn accelerated last December. As the economy weakened, companies quickly responded by cutting or postponing capital spending, especially in information technology. Earnings and earnings projections fell precipitously, pulling stock prices down. The Fed started cutting interest rates between Open Market Committee meetings in early January in an effort to stimulate the economy - attempting to avoid a recession. The Fed Funds target is down 2.0% so far this year. This will eventually have a positive effect, though it usually takes six to nine months for results of rate cuts to become apparent. Therefore, we will most likely start to see the economy accelerate in the third quarter of 2001 as the Fed rate cuts begin to have an effect and capital spending picks up again. Looking ahead, we believe the high-tech/information revolution we have been experiencing will eventually be as extensive as the industrial revolution and will continue for decades. Computer hardware, software and communications equipment are today's tools in this revolution. The need for these products will not decrease, except on a temporary basis, such as we are now experiencing. The forms and adaptations of equipment and software will continually change. We believe the fastest growth will occur in the sectors that deliver products for the mainstream of this revolution. Market Outlook As we begin the second quarter, I remain extremely bullish about the prospects for the stock market in general, and technology in particular, for the intermediate-term (six to twelve months) and the long-term. At this stage in the game, the risk/reward potential is now much more attractive for stocks than for bonds. Record amounts of cash in brokerage accounts and short interest (investors that have sold stock they don't own) are two indicators that suggest a market bottom may have been set in early April. Also, widespread negative sentiment and the Chinese spy-plane sell-off at the beginning of April are typical of the final capitulation stage of a bear market. Although many factors contributed to the present bear market, the biggest factor has been the Fed's tight monetary policy. Fortunately, this is an easy problem to fix since macro-economic fundamentals remain quite positive. Now that the Fed has finally lowered the Fed Funds rate to 4.5 %, the economy should begin to stabilize. With further rate cuts the stock market should start to discount the present negative economic conditions in favor of better conditions later this year. The final stage of a bear market is always the most frustrating. Just as the euphoria at market tops is contagious, the disappointment and despair at market bottoms is demoralizing. There is a tendency to focus on how the loss of capital could have been avoided and a desire to take action to prevent further losses. My experience in achieving high long-term returns, however, is that investment consistency based on macro-economic expectations is the best course. I believe favorable macro-economic conditions, such as the expanding global economy and technological advances enhancing productivity and communication, will bring back the secular bull market once there is a general consensus that the Fed has lowered rates enough to accommodate higher economic growth. Accordingly, rather than taking a defensive approach, I believe now is the time to be most aggressive. Thank you for your continued confidence, Paul Martin Portfolio Manager While it is anticipated that the Fund will diversify its investments across a range of industries, certain sectors (such as the technology sector) are likely to be over-weighted compared to others because the Fund's advisor seeks the best investment values regardless of sector. One of the risks associated with an over-weighting in any sector is that a weakness in this sector could result in significant losses to the Fund. Fund Holdings Ten Largest Holdings Percent of Net Assets 3/31/01 -------------------- ----------------------------- Dell Computer 6.8% Advanced Micro Devices 2.9% Starbucks 2.9% Electronic Arts 2.9% Advent Software 2.8% LAM Research 2.3% Berkshire Hathaway 2.3% Medtronic 2.3% Citigroup 2.2% Qualcomm 2.1% - Returns for Periods Ended March 31, 2001 -
Average Annual Return Since 1st Quarter Last 6 Inception Fund/Index 2001 Months 1 Year (April 1, 1999) - ---------- ---- ------ ------ --------------- U.S. Opportunity Fund -24.32% -48.35% -54.86% -14.50% S&P 500 -11.85% -18.74% -21.67% -4.15%
GROWTH OF $10,000 U.S. OPPORTUNITY FUND vs. S&P 500 3/31/99 $10,000 $10,000 4/30/99 $9,870 $10,328 5/31/99 $9,690 $10,085 6/30/99 $10,560 $10,644 7/31/99 $10,210 $10,312 8/31/99 $10,350 $10,261 9/30/99 $10,450 $9,980 10/31/99 $11,410 $10,611 11/30/99 $12,640 $10,827 12/31/99 $14,630 $11,464 1/31/00 $14,110 $10,888 2/29/00 $15,750 $10,682 3/31/00 $16,190 $11,727 4/30/00 $15,520 $11,374 5/31/00 $13,680 $11,141 6/30/00 $15,530 $11,415 7/31/00 $14,470 $11,237 8/31/00 $15,970 $11,934 9/30/00 $14,150 $11,305 10/31/00 $13,320 $11,257 11/30/00 $10,040 $10,370 12/31/00 $9,657 $10,421 1/31/01 $11,259 $10,790 2/28/01 $8,638 $9,807 3/31/01 $7,308 $9,186 The Standard & Poor's 500 Index is an index of the 500 largest capitalized stocks in the United States and is widely recognized as a general indicator of the overall health of the U.S. stock market. Past performance is no guarantee of future investment performance. Yield, share price, and returns on an actual investment will fluctuate, and may result in a gain or loss when you sell your shares. The Martin Capital U.S. Opportunity Fund is offered by prospectus only. The prospectus contains important information about the Fund's objectives, risks, fees, distribution charges, and other expenses. You should read the prospectus carefully before investing or sending money. You can or obtain a prospectus by calling 1-877-477-7036. Unified Financial Securities, Inc distributes shares of the Martin Capital U.S. Opportunity Fund.
Martin Capital U.S. Opportunity Fund Schedule of Investments - March 31, 2001 Common Stocks - 108.3% Shares Value Computer Communication Equipment - 1.5% 3Com Corp. (a) 5,000 $ 28,594 Cisco Systems, Inc. (a) 1,800 28,462 ----------------- 57,056 ----------------- Computer Peripheral Equipment, NEC - 3.7% Cirrus Logic (a) 3,000 44,812 Crossroads Systems (a) 6,000 33,750 Palm Inc. (a) 2,900 24,378 RSA Sec. Inc. (a) 1,500 37,031 ----------------- 139,971 ----------------- Computer Services & Software - 4.4% Electronic Arts, Inc. (a) 2,000 108,500 Rational Software (a) 2,000 35,500 Vignette Corp. (a) 3,600 23,175 ----------------- 167,175 ----------------- Computer Storage & Devices - 2.5% EMC Corp. (a) 1,800 52,920 Sandisk Corp. (a) 2,000 40,750 ----------------- 93,670 ----------------- Computers & Office Equipment - 5.8% Gateway, Inc. (a) 3,000 50,430 Hewlett-Packard Co. 1,600 50,032 Micron Technology, Inc. (a) 1,700 70,601 National Instruments Corp. (a) 1,500 48,937 ----------------- 220,000 ----------------- Crude Petroleum & Natural Gas - 1.5% Enron Corp. 1,000 58,100 ----------------- Electrical Industrial Apparatus - 0.9% American Power Conversion Corp. (a) 2,700 34,805 ----------------- Electrical Work - 1.5% Quanta Services, Inc. (a) 2,500 55,800 ----------------- Electromedical & Electrotherapeutic Apparatus - 2.3% Medtronic, Inc. 1,900 86,906 ----------------- Electronic Computers - 6.8% Dell Computer Corp. (a) 10,000 256,875 ----------------- Electronic Instruments - 1.1% Texas Instruments, Inc. 1,400 43,372 ----------------- Equipment - 2.3% Lam Research Corp. (a) 3,700 87,875 ----------------- Martin Capital U.S. Opportunity Fund Schedule of Investments - March 31, 2001 Common Stocks - continued Shares Value Finance Services - 1.6% American Express Co. 1,500 $ 61,950 ----------------- Fire, Marine, Casualty Insurance - 2.3% Berkshire Hathaway Inc. - Cl B (a) 40 87,040 ----------------- General Industrial Machinery & Equipment - 1.1% Tyco International, Inc. 1,000 43,230 ----------------- Glass, Glassware, Pressed or Blown - 0.7% Corning, Inc. 1,200 24,828 ----------------- Grocery Stores - 1.9% Whole Foods Market, Inc. (a) 1,700 71,613 ----------------- Hotels & Motels - 1.8% Four Seasons Hotels 1,400 69,286 ----------------- Instruments for Meas & Testing of Electricity & Elec Signals - 1.2% Agilent Technologies, Inc. (a) 1,500 46,095 ----------------- National Commercial Banks - 2.2% Citigroup, Inc. 1,866 83,933 ----------------- Operative Builders - 1.1% Centex Corp. 1,000 41,650 ----------------- Pharmaceutical Preparations - 6.0% Lilly (Eli) & Co. 1,000 76,660 Merck & Co., Inc. 1,000 75,900 Pfizer, Inc. 1,800 73,710 ----------------- 226,270 ----------------- Photgraphing & Imaging - 1.6% Dupont Photomask, Inc. (a) 1,400 61,431 ----------------- Radio & TV Broadcasting & Communication Equipment - 2.9% QUALCOMM, Inc. (a) 1,400 79,275 Motorola, Inc. 2,300 32,798 ----------------- 112,073 ----------------- Real Estate Investment Trusts - 0.9% Starwood Hotels 1,000 34,010 ----------------- Martin Capital U.S. Opportunity Fund Schedule of Investments - March 31, 2001 Common Stocks - continued Shares Value Restaurants - 2.9% Starbucks Corp. (a) 2,600 $ 110,338 ----------------- Retail-Lumber & Other Building Materials Dealers - 1.5% Home Depot, Inc. 1,300 56,030 ----------------- Security Brokers, Dealers & Flotation Companies - 7.7% Bear Stearns Cos., Inc. 1,700 77,758 E*Trade Group, Inc. (a) 5,000 34,900 Knight Trading Group (a) 3,000 43,875 Schwab (Charles) Corp. 2,600 40,092 Southwest Securities Group, Inc. 2,750 51,370 TD Waterhouse Group (a) 4,000 43,200 ----------------- 291,195 ----------------- Semiconductors - 10.1% Advanced Micro Devices, Inc. (a) 4,200 111,468 Altera Corp. (a) 2,800 60,025 Intel Corp. 1,600 42,100 JDS Uniphase Corp. (a) 1,200 22,125 LSI Logic Corp. (a) 2,500 39,325 National Semiconduct Corp. (a) 1,500 40,125 Silicon Laboratories, Inc. (a) 3,500 69,563 ----------------- 384,731 ----------------- Services - Computer Integrated Systems Designs - 4.7% General Electric, Inc. 1,500 62,790 Netsolve, Inc. (a) 9,000 63,000 Sun Microsystems, Inc. (a) 2,600 39,962 Yahoo, Inc. (a) 800 12,600 ----------------- 178,352 ----------------- Services - Computer Programming Services - 5.4% AOL Time Warner (a) 1,450 58,217 Advent Software, Inc. (a) 2,420 107,236 BEA Systems, Inc. (a) 1,000 29,375 Perficient, Inc. (a) 4,000 10,938 ----------------- 205,766 ----------------- Services - Prepackaged Software - 6.8% Computer Associates Internation, Inc. 2,400 65,280 Cadence Design Systems, Inc. (a) 1,900 35,131 Microsoft Corp. (a) 1,200 65,625 Oracle Corp. (a) 3,800 56,924 Veritas Software Corp. (a) 800 36,992 ----------------- 259,952 ----------------- Specialty - 2.0% Tiffany & Co. 2,800 76,300 ----------------- Martin Capital U.S. Opportunity Fund Schedule of Investments - March 31, 2001 Common Stocks - continued Shares Value Specialty - Industry Machinery - 1.5% Applied Materials, Inc. (a) 1,300 $ 56,550 ----------------- Telephone & Telegraph Apparatus - 1.1% Nortel Networks Corp. 3,000 42,150 ----------------- Telephone Communications (No Radio Telephone) - 4.5% Exodus Communications, Inc. (a) 1,600 17,200 Global Crossing LTD (a) 3,000 40,470 Lucent Technologies, Inc. 3,000 29,910 Qwest Communications International, Inc. (a) 1,800 63,090 Sprint Corp. 1,000 21,990 ----------------- 172,660 ----------------- Wireless Communication Services - 0.5% Sprint PCS Group (a) 1,000 19,000 ----------------- TOTAL COMMON STOCKS (Cost $ 5,662,470) 175,326 4,118,038 ----------------- Principal Value Value U.S. Government Obligations - 5.5% U.S. Treasury Bond, 5.5%, (Cost $200,905) 200,000 209,762 ----------------- Money Market Securities - 3.2% Firstar Treasury Fund, 4.5% (Cost $122,715) 122,715 122,715 ----------------- TOTAL INVESTMENTS - 117.0% (Cost $ 5,986,090) 4,450,515 Other assets less liabilities - (17.0)% (648,394) ----------------- TOTAL NET ASSETS -100% $ 3,802,121 ================= (a) Non-income producing Martin Capital U.S. Opportunity Fund Schedule of Investments - March 31, 2001 Written Put Options Shares Subject Index Funds / Expiration Date @ Exercise Price to Put Value --------------- ----------------- NASDAQ 100 Trust Unit / June 2001 @ 27 2 $ 199,700 NASDAQ 100 Trust Unit / September 2001 @ 25 1 90,520 NASDAQ 100 Trust Unit / September 2001 @ 27 2 199,700 S&P 500 Index / December 2001 @ 16 2 79,670 ----------------- Totals (Premiums received $502,382) $ 569,590 See accompanying notes which are an integral part of the financial statements.
Martin Capital U.S. Opportunity Fund March 31, 2001 Statement of Assets & Liabilities Assets Investment in securities (cost $5,986,089) $ 4,450,515 Cash 5,185 Dividends receivable 1,268 Interest receivable 2,002 Receivable for securities sold 276,975 ------------------ Total assets 4,735,945 Liabilities Put Options Written (Premium received $502,382) $ 569,590 Accrued investment advisory fee payable 4,395 Payable for securities purchased 359,839 ------------------ Total liabilities 933,824 ------------------ Net Assets $ 3,802,121 ================== Net Assets consist of: Paid in capital 6,565,209 Accumulated undistributed net realized loss on investments (1,160,306) Net unrealized depreciation on investments (1,602,782) ------------------ Net Assets, for 524,083 shares $ 3,802,121 ================== Net Asset Value Offering price and redemption price per share ($3,802,121/524,083) $ 7.25 ================== See accompanying notes which are an integral part of the financial statements.
Martin Capital U.S. Opportunity Fund Statement of Operations March 31, 2001 Investment Income Dividend income $ 12,143 Interest income 16,455 -------------- Total Income 28,598 -------------- Expenses Investment advisory fee $ 61,625 Trustees' fees 1,025 -------------- Total expenses before reimbursement 62,650 Reimbursed expenses (1,025) -------------- Total operating expenses 61,625 -------------- Net Investment Loss (33,027) -------------- Realized & Unrealized Gain (Loss) Net realized loss on: Investment securities (760,157) Option securities (368,790) Change in net unrealized depreciation Investment securities (2,582,912) Option securities (67,208) -------------- Net realized & unrealized loss on investment securities & option securities (3,779,067) -------------- Net decrease in net assets resulting from operations $(3,812,094) ============== See accompanying notes which are an integral part of the financial statements.
Martin Capital U.S. Opportunity Fund Statement of Changes in Net Assets Year ended Year ended March 31, 2001 March 31, 2000 ----------------- ----------------- Increase (Decrease) in Net Assets From Operations Net investment loss $ (33,027) $ (6,151) Net realized gain (loss) on: Investment securities (760,157) 5,598 Option securities (368,790) 0 Change in net unrealized appreciation (depreciation) on: Investment securities (2,582,912) 1,047,338 Option securities (67,208) 0 ----------------- ----------------- Net increase (decrease) in net assets resulting from operations (3,812,094) 1,046,785 ----------------- ----------------- Distribution to Shareholders From net investment income - - From net realized gain (loss) (31,359) - ----------------- ----------------- Total distributions (31,359) - ----------------- ----------------- Share Transactions Net proceeds from sale of shares 4,498,795 2,694,998 Shares issued in reinvestment of distributions 31,359 - Shares redeemed (597,815) 28,548 ----------------- ----------------- Net increase in net assets resulting from share transactions 3,932,339 2,666,450 ----------------- ----------------- Total Increase in Net Assets 88,886 3,713,235 ----------------- ----------------- Net Assets Beginning of period 3,713,235 0 ----------------- ----------------- End of period [including accumulated undistributed net investment loss of $33,027 and $6,151, respectively] $ 3,802,121 $ 3,713,235 ================= ================= Capital Shares Transactions Shares sold 344,971 231,507 Shares issued in reinvestment of distributions 3,527 - Shares repurchased (53,828) (2,094) Net increase from capital tranactions 294,670 229,413 See accompanying notes which are an integral part of the financial statements.
Martin Capital U.S. Opportunity Fund Financial Highlights Year ended Year ended March 31, 2001 March 31, 2000 ------------------ ------------------- Selected Per Share Data Net asset value, beginning of period $ 16.19 $ 10.00 ------------------ ------------------- Income from investment operations Net investment income (loss) (0.08) (0.04) Net realized and unrealized gain (loss) (8.79) 6.23 ------------------ ------------------- Total from investment operations (8.87) 6.19 ------------------ ------------------- Less distributions From net investment income 0.00 0.00 From net realized gain (loss) (0.07) 0.00 ------------------ ------------------- Total distributions (0.07) 0.00 ------------------ ------------------- Net asset value, end of period $ 7.25 $ 16.19 ================== =================== Total Return (54.86)% 61.90% Ratios and Supplemental Data Net assets, end of period (000) $3,802 $3,713 Ratio of expenses to average net assets 1.25% 1.25% Ratio of expenses to average net assets before reimbursement 1.27% 1.37% Ratio of net investment income (loss) to average net assets (0.67)% (0.35)% Ratio of net investment income (loss) to average net assets before reimbursement (0.69)% (0.47)% Portfolio turnover rate 69.95% 0.35% See accompanying notes which are an integral part of the financial statements.
Martin Capital U.S. Opportunity Fund Notes to Financial Statements March 31, 2001 NOTE 1. ORGANIZATION The Martin Capital U.S. Opportunity Fund (the "Fund") was organized as a series of the AmeriPrime Fund, an Ohio business trust (the "Trust") on August 14, 1998 and commenced operations on April 1, 1999. The Trust is established under the laws of Ohio by an Agreement and Declaration of Trust dated August 8, 1995, (the "Trust Agreement"). The Fund is registered under the Investment Company Act of 1940, as amended, as a non-diversified series of the Trust. The investment objective of the Fund is to provide long-term capital appreciation. The Trust Agreement permits the Trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. Securities Valuation - Securities, which are traded on any exchange or on the NASDAQ over-the-counter market, are valued at the last quoted sale price. Lacking a last sale price, a security is valued at its last bid price except when, in the Advisor's opinion, the last bid price does not accurately reflect the current value of the security. All other securities for which over-the-counter market quotations are readily available are valued at their last bid price. When market quotations are not readily available, when the Advisor determines the last bid price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Advisor, in conformity by guidelines adopted and subject to review of the Board. Fixed-income securities generally are valued by using market quotations, but may be valued based on prices furnished by a pricing service when the Advisor believes such prices accurately reflect the fair market value of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. If the Advisor decides that a price provided by the pricing service does not accurately reflect the fair market value of the securities, when prices are not readily available form 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. 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 at least 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. Option writing - When the Fund writes an option; an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains from investments. Martin Capital U.S. Opportunity Fund Notes to Financial Statements March 31, 2001 NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premiums are added to the proceeds from the sale of the underlying security or currency in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as a writer of options, bears the market risk of an unfavorable change in the price of the security underlying the written option. Other - The Fund follows industry practices and records security transactions on the trade date. The specific identification method is used for determining gains or losses for financial statements and income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Discounts and premiums on securities purchased are amortized over the life of the respective securities. Generally accepted accounting principles require that permanent financial reporting tax differences relating to shareholder distributions be reclassified to paid-in capital. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains Martin Capital Advisors, L.L.P. (the "Advisor") to manage the Fund's investments. The Advisor is a Texas limited liability partnership organized on January 29, 1999. Paul Martin, President and controlling partner of the Advisor is primarily responsible for the day-to-day management of the Fund's portfolio. Under the terms of the management agreement (the "Agreement"), the Advisor manages the Fund's investments subject to approval of the Board of Trustees and pays all of the expenses of the Fund except brokerage fees and commissions, taxes, interest, fees and expenses of the non-interested person trustees, and extraordinary expenses. As compensation for its management services and agreement to pay the Fund's expenses, the Fund is obligated to pay the Advisor a fee computed and accrued daily and paid monthly at an annual rate of 1.25% of the average daily net assets of the Fund. It should be noted that most investment companies pay their own operating expenses directly, while the Advisor pays the Fund's expenses, except those specified above. For the fiscal year ended March 31, 2001, the Advisor earned fees of $61,625 from the Fund. The Advisor has contractually agreed to reimburse expenses to maintain the Fund's total operating expense ratio at 1.25% of net assets through March 1, 2003. For the fiscal year ended March 31, 2001, the Advisor reimbursed expenses of $1,025 for the Fund. 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 Fund. 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. Martin Capital U.S. Opportunity Fund Notes to Financial Statements March 31, 2001 NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued The Fund retains Unified to manage the Fund's business affairs and provide the Fund 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 the Fund per the management agreement. Prior to December 31, 2000, the Fund retained AmeriPrime Financial Securities, Inc., to act as the principal distributor of its 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 Fund retained Unified Financial Securities, Inc. to act as the principal distributor of its 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. INVESTMENTS For the fiscal year ended March 31, 2001, purchases and sales of investment securities, other than short-term investments, aggregated $7,985,451 and $3,589,186, respectively. As of March 31, 2001, the gross unrealized appreciation for all securities totaled $196,590 and the gross unrealized depreciation for all securities totaled $1,732,164 for a net unrealized depreciation of $1,535,574. The aggregate cost of securities for federal income tax purposes at March 31, 2001 was $5,986,089. NOTE 5. 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 6. CALL OPTIONS WRITTEN Transactions in options written by the Fund during the year ended March 31, 2001 were as follows: Number of Premiums Contracts Received Options outstanding at March 31, 2000 0 $0 Options written 921,746 435 Options terminated in closing purchase transactions (246) (377,096) Options expired (182) (42,268) Options outstanding at March 31, 2001 7 502,382
Martin Capital U.S. Opportunity Fund Notes to Financial Statements March 31, 2001 NOTE 7. RELATED PARTY TRANSACTIONS The Advisor is not a registered broker-dealer of securities and thus does not receive commissions on trades made on behalf of the Fund. The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of March 31, 2001, National Investor Services owned of record in aggregate more than 62% of the Fund. INDEPENDENT AUDITOR'S REPORT To The Shareholders and Board of Trustees Martin Capital U.S. Opportunity Funds (series of AmeriPrime Funds) We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the Martin Capital U.S. Opportunity Fund as of March 31, 2001, and the related statement of operations, the statement of changes in net assets, and financial highlights for each of the two years then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with 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 as of March 31, 2001 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of the Martin Capital U.S. Opportunity Fund as of March 31, 2001, the results of their operations, the changes in their net assets, and the financial highlights for each of the two years then ended, in conformity with accounting principles generally accepted in the United States of America. McCurdy & Associates CPA's, Inc. Westlake, Ohio 44145 April 17, 2001 -----END PRIVACY-ENHANCED MESSAGE-----