-----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, CHdkYBfOt9U5IuKPie842ljVYvzXoY0uGViPs1+BNjC6ptrTW9JMnGggahrDsXkf q4OBQJyHCDGA9PYJqHRdQw== 0001035449-01-500323.txt : 20020412 0001035449-01-500323.hdr.sgml : 20020412 ACCESSION NUMBER: 0001035449-01-500323 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011128 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERIPRIME FUNDS CENTRAL INDEX KEY: 0001000579 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 752616671 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-09096 FILM NUMBER: 1800284 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 westcottn30d.txt WESTCOTT N30 Management's Discussion of Fund Performance The year 2001 has again proven to be a difficult one for investors, particularly in the Technology sector. The larger capitalized technology stocks are down on average approximately 40% year-to-date through September 30, 2001. For the same period, Class A shares of the Fund were down 33.91%. For the fiscal year ended September 30, 2001, Class A shares of the Fund were down 60.55%. Performance to date continues to underscore the importance of earnings in this market. Further, the events of September 11th have given us a second factor that has contributed to this volatility. The market does not like uncertainty, and it has had to deal with a great deal of uncertainty lately. Stock gains will continue to sputter until we begin to get some guidance for companies that earnings are beginning to recover, which may not come until mid-2002. The silver lining is that year-over-year comparisons should begin to improve soon. The market may also begin to discount further earnings disappointments, as earnings disappointments will likely disappear in the coming months due to much lower expectations. We believe that the technology investors' risk is not being factored into the market at this time. After the events on September 11, the market began to tumble. We believe that the Fund was positioned to handle this effectively. Normally we would have had at least 65% of Fund assets in technology stocks; however, in May we went defensive. As of September 30, we had less than 10% of the Fund invested in stocks. Currently, approximately 90% of the Fund is invested in stocks. Now that the market has corrected sharply, selling pressure seems to have lifted for the time being. It remains to be seen if this pause can be translated into a full-blown recovery; however, many of the necessary ingredients are in place. Technology stocks as a whole had outperformed the rest of the market in the third quarter. This could be taken as an indication of a washout in the sector and a slight sign of a recovery in earnings. If true, investors should return to technology as earnings begin to show greater improvement. As we complete the year 2001, we expect to concentrate in technology stocks with sound earnings prospects. In light of the performance of the Technology and Internet sectors in general, the Fund has no dividends or capital gains to report this year. Aegis Asset Management, Inc. November 9, 2001 For a prospectus and more information, including charges and expenses, call toll free 1-800-998-6658. The prospectus should be read carefully before investing. Past performance does not guarantee future results. Distributed by Unified Financial Securities, Inc., SIPC, 431 N. Pennsylvania St. Indianapolis, IN 46204. Member NASD and SIPC Management's Discussion of Fund Performance (cont.) For the calendar year to date, the Westcott Technology Fund (the "Fund")(ticker symbol: NETAX)(Formerly, Westcott Nothing But Net Fund) had total losses of 33.91% and 33.91% for Class A shares and Class I shares, respectively, with net asset values as of September 30, 2001 of $2.30 and $2.28 per share, respectively. The returns for each class are set forth below. Average Annual Total Return The Street.Com Periods ending Class - I S&P 500 Internet NASDAQ 100 9/30/2001 Class - A Stock Index Index Stock Index - ----------------------- ------------------ -------------- ----------------- ----------------- ------------------ One Year -60.55% -60.55% -26.61% -83.31% -67.26% Year to Date 2001 -13.91% -33.91% -20.38% -60.37% -50.09% Average Annual Return -56.78% -55.74% -14.16% -0.70% -41.81% Since Inception
Total Return Since Inception (December 9, 1999) WestCott Technology Fund - Class A - $2184 1/31/00 $ 9,690 3/31/00 9,640 5/31/00 5,780 7/31/00 5,840 9/30/00 5,830 11/30/00 3,760 1/31/01 3,910 3/31/01 2,410 5/31/01 2,800 7/31/01 2,520 9/30/01 2,184 TheStreet.com Internet Index - $1,122 1/31/00 $ 9,906 3/31/00 10,424 5/31/00 7,454 7/31/00 6,839 9/30/00 6,719 11/30/00 3,556 1/31/01 3,637 3/31/01 2,111 5/31/01 2,476 7/31/01 1,929 9/30/01 1,122 S&P 500 Stock Index - $7,581 1/31/00 $ 9,949 3/31/00 10,716 5/31/00 10,180 7/31/00 10,268 9/30/00 10,330 11/30/00 9,476 1/31/01 9,860 3/31/01 8,394 5/31/01 9,106 7/31/01 8,797 9/30/01 7,581 NASDAQ 100 Stock Index - $3,696 1/31/00 $11,284 3/31/00 13,901 5/31/00 10,508 7/31/00 11,410 9/30/00 11,288 11/30/00 7,925 1/31/01 8,199 3/31/01 4,975 5/31/01 5,692 7/31/01 5,323 9/30/01 3,696 WestCott Technology Fund - Class I - $2,280 1/31/00 $ 9,510 3/31/00 9,590 5/31/00 5,730 7/31/00 5,800 9/30/00 5,780 11/30/00 3,720 1/31/01 3,880 3/31/01 2,390 5/31/01 2,770 7/31/01 2,500 9/30/01 2,280 These graphs show the value of a hypothetical initial investment of $10,000 in the applicable Class of the Fund, S&P 500 Index and The Street.com Internet Index on December 9, 1999 (inception of the Fund) and held through September 30, 2001. The S&P 500 and the NASDAQ 100 Index are widely recognized unmanaged indices of common stock prices and are representative of a broader market and range of securities than is found in the Westcott Technology Fund portfolio. The Street.com Index is a widely recognized index of Internet stocks and is representative of a broader market and range of securities than is found in the Westcott Technology Fund portfolio. The Index returns do not reflect expenses, which have been deducted from the Fund's return. These performance figures include the change in value of the stocks in the index plus the reinvestment of dividends. The performance of the Fund is computed on a total return basis, which includes reinvestment of all dividends. Investment returns and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than their original purchase price. THE FUND'S RETURN REPRESENTS PAST PERFORMANCE AND DOES NOT PREDICT FUTURE RESULTS Wescott Technology Fund (Formerly, Westcott Nothing But Net Fund) Schedule of Investments - September 30, 2001 Common Stocks - 9.9% Shares Value Computer & Office Equipment - 2.2% International Business Machines Corp. 135 $ 12,460 ----------------- Semiconductors & Related Devices - 1.6% Intel Corp. 450 9,198 ----------------- Services - Computer Integrated Systems Design - 3.2% IDT Corp. (a) 735 8,452 Yahoo!, Inc. (a) 1,150 10,132 ----------------- 18,584 ----------------- Services - Computer Programming Services - 2.2% VeriSign, Inc. (a) 300 12,570 ----------------- Services - Prepackaged Software - 0.7% Ariba, Inc. (a) 2,050 3,813 ----------------- TOTAL COMMON STOCKS (Cost $159,174) 56,625 ----------------- Principal Amount Value Money Market Securities - 90.2% Huntington Money Fund - Investment A, 2.24% (b) 520,006 $ 520,006 ----------------- (Cost $520,006) TOTAL INVESTMENTS - 100.1% (Cost $679,180) 576,631 ----------------- Liabilities in excess of other assets - (0.1)% (463) ----------------- TOTAL NET ASSETS - 100.0% $ 576,168 =================
(a) Non-income producing (b) Variable rate security; the coupon rate shown represents the rate at September 30, 2001. See accompanying notes which are an integral part of the financial statements. Wescott Technology Fund (Formerly, Westcott Nothing But Net Fund) September 30, 2001 Statement of Assets & Liabilities Assets Investment in securities (cost $679,180) $ 576,631 Interest receivable 817 ------------------- Total assets 577,448 Liabilities Accrued investment advisory fee 616 Distribution fee - Class A 664 ------------------- Total liabilities 1,280 Net Assets $ 576,168 =================== Net Assets consist of: Paid in capital $ 2,740,172 Accumulated net realized gain (loss) on investments (2,061,455) Net unrealized appreciation (depreciation) on investments (102,549) ------------------- Net Assets $ 576,168 =================== Class A: Net Asset Value, and redemption price per share ($59,625/25,940 shares) $ 2.30 =================== Maximum offering price per share (net assets value plus sales charge of 5%) $ 2.42 =================== Class I: Net Asset Value, offering price and redemption price per share ($516,543/226,192 shares) $ 2.28 ===================
See accompanying notes which are an integral part of the financials statements. Wescott Technology Fund (Formerly, Westcott Nothing But Net Fund) Statement of Operations as of September 30, 2001 Investment Income Interest income $ 7,346 Dividend income 547 --------------- Total Income 7,893 Expenses Investment advisory fee $ 12,686 Distribution fees - Class A 230 Trustee's fees 2,123 --------------- Total expenses before reimbursement 15,039 Reimbursed expenses (2,123) --------------- Total operating expenses 12,916 --------------- Net Investment Income (Loss) (5,023) --------------- Realized & Unrealized Gain (Loss) Net realized gain (loss) on investment securities (642,446) Change in net unrealized appreciation (depreciation) on investment securities (191,992) --------------- Net realized and unrealized gain (loss) on investment securities (834,438) --------------- Net increase (decrease) in net assets resulting from operations $ (839,461) ===============
See accompanying notes which are an integral part of the financial statements. Wescott Technology Fund (Formerly, Westcott Nothing But Net Fund) Statement of Changes in Net Assets Year ended Period ended September 30, 2001 September 30, 2000 (a) ---------------------- ------------------------- Increase (Decrease) in Net Assets Operations Net investment income (loss) $ (5,023) $ (22,648) Net realized gain (loss) on investment securities (642,446) (1,419,009) Change in net unrealized appreciation (depreciation) (191,992) 89,443 ---------------------- ---------------------- Net increase (decrease) in net assets resulting from operations (839,461) (1,352,214) ---------------------- ---------------------- Distributions to shareholders From net investment income 0 0 From net realized gain 0 0 ---------------------- ---------------------- Total distributions 0 0 Share Transactions - net increase (decrease) Class A (7,629) 289,950 Class I (140,617) 2,626,139 ---------------------- ---------------------- Net increase (decrease) in net assets resulting from share transactions (148,246) 2,916,089 ---------------------- ---------------------- Total increase (decrease) in net assets (987,707) 1,563,875 ---------------------- ---------------------- Net Assets Beginning of period 1,563,875 0 ---------------------- ---------------------- End of period $ 576,168 $ 1,563,875 ====================== ====================== Capital Share Transactions - A Shares Shares sold 0 57,096 Shares issued in reinvestment of distributions 0 0 Shares repurchased (3,012) (28,144) ---------------------- ---------------------- Net increase (decrease) from capital transactions (3,012) 28,952 ====================== ====================== Capital Share Transactions - I Shares Shares sold 112,214 285,801 Shares issued in reinvestment of distributions 0 0 Shares repurchased (127,625) (44,197) ---------------------- ---------------------- Net increase (decrease) from capital transactions (15,411) 241,604 ====================== ====================== (a) For the period December 9, 1999 (Commencement of Operations) to September 30, 2000
See accompanying notes which are integral part of the financial statements. Wescott Technology Fund (Formerly, Westcott Nothing But Net Fund) Class A Financial Highlights Year ended Period ended September 30, 2001 September 30, 2000 (a) --------------------------------- --------------------------- Selected Per Share Data Net asset value, beginning of period $ 5.83 $ 10.00 --------------------------------- --------------------------- Income (loss) from investment operations Net investment income (loss) (0.03) (0.10) Net realized and unrealized gain (loss) (3.50) (4.07) --------------------------------- --------------------------- Total from investment operations (3.53) (4.17) --------------------------------- --------------------------- Less distributions: Distributions from net investment income 0.00 0.00 Distributions from net realized gains 0.00 0.00 --------------------------------- --------------------------- Total distributions 0.00 0.00 --------------------------------- --------------------------- Net asset value, end of period $ 2.30 $ 5.83 ================================= =========================== Total Return (60.55)% (41.70)(b) Ratios and Supplemental Data Net assets, end of period (000) $60 $169 Ratio of expenses to average net assets 1.95% 1.97%(c) Ratio of expenses to average net assets before reimbursement 2.24% 2.09%(c) Ratio of net investment income (loss) to average net assets (0.90)% (1.61)(c) Ratio of net investment income (loss) to average net assets before reimbursement (1.19)% (1.73)(c) Portfolio turnover rate 48.57% 190.14%(c) (a) For the period December 9, 1999 (Commencement of Operations) to September 30, 2000 (b) For periods of less than a full year, total return is not annualized (c) Annualized
See accompanying notes which are an integral part of the financial statements. Wescott Technology Fund (Formerly, Westcott Nothing But Net Fund) Class I Financial Highlights Year ended Period ended September 30, 2001 September 30, 2000 (a) Selected Per Share Data Net asset value, beginning of period $ 5.77 $ 10.00 ----------------------- --------------------------- Income (loss) from investment operations Net investment income (loss) (0.02) (0.08) Net realized and unrealized gain (loss) (3.47) (4.15) ----------------------- --------------------------- Total from investment operations (3.49) (4.23) ----------------------- --------------------------- Less distributions: Distributions from net investment income 0 0 Distributions from net realized gains 0 0 ----------------------- --------------------------- Total distributions 0 0 ----------------------- --------------------------- Net asset value, end of period $ 2.28 $ 5.77 ======================= =========================== Total Return (60.55)% (42.30)(b) Ratios and Supplemental Data Net assets, end of period (000) $517 $1,395 Ratio of expenses to average net assets 1.70% 1.72% (c) Ratio of expenses to average net assets before reimbursement 1.98% 1.86% (c) Ratio of net investment income (loss) to average net assets (0.64)% (1.32)(c) Ratio of net investment income (loss) to average net assets before reimbursement (0.93)% (1.46)(c) Portfolio turnover rate 48.57% 190.14% (c) (a) For the period December 9, 1999 (Commencement of Operations) to September 30, 2000 (b) For periods of less than a full year, total return is not annualized (c) Annualized
See accompanying notes which are an integral part of the financial statements. Westcott Technology Fund (Formerly, Westcott Nothing But Net Fund) Notes to Financial Statements September 30, 2001 NOTE 1. ORGANIZATION The Westcott Technology Fund (the "Fund") was organized as a diversified series of AmeriPrime Funds (the "Trust") on September 29, 1999 and commenced operations on December 9, 1999. The Trust is an open-end investment company established under the laws of Ohio by an Agreement and Declaration of Trust dated August 8, 1995 (the "Trust Agreement"). The Trust Agreement permits the Board of Trustees to issue an unlimited number of shares of beneficial interest without par value. The Fund is one of a series of funds currently authorized by the Board of Trustees. The Fund's investment objective is to provide long term growth of capital. The Board of Trustees has authorized 2 classes of shares of the Fund: Class A shares, and Institutional 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 the Fund in the preparation of its financial statements. Securities Valuation - Securities that are traded on any exchange or on the NASDAQ over-the-counter market are valued at the last-quoted sale price. Lacking a last sale price, a security is valued at its last bid price except when, in the opinion of the Adviser, the last bid price does not accurately reflect the current value of the security. All other securities for which over-the-counter market quotations are readily available are valued at their last bid price. When market quotations are not readily available, when the Adviser determines the last bid price does not accurately reflect the current value, or when restricted securities are being valued, such securities are valued as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review of the Board of Trustees. Fixed income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices accurately reflect the fair market values of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. If the Adviser 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 from a pricing service or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Adviser, 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 of Trustees 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 comply with federal tax rules regarding distribution of substantially all its net investment income and capital gains. These rules may cause multiple distributions during the course of the year. Westcott Technology Fund (Formerly, Westcott Nothing But Net Fund) Notes to Financial Statements September 30, 2001 - continued NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued 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 principals require that permanent financial reporting tax differences relating to shareholder distributions be reclassed to paid in capital. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Aegis Management, Inc., 230 Westcott St., Suite 1, Houston, Texas 77007, serves as investment adviser to the Fund. The Adviser was organized as a Texas corporation in 1933. The Adviser manages large capitalization equity, medium capitalization equity, balanced and fixed income portfolios for a variety of tax-exempt and taxable clients. The investment decisions for the Fund are made by a committee of the Adviser, which is primarily responsible for the day-to-day management of the Fund's portfolio. Under the terms of the management agreement (the "Agreement"), the Adviser manages the Fund's investments subject to approval of the Board of Trustees and pays all of the expenses of the Fund except brokerage fees and commissions, taxes, borrowing costs (such as (a) interest and (b) dividend expenses on securities sold short), 12b-1 expenses, fees and expenses of the non-interested person Trustees and extraordinary expenses. As compensation for its management services and agreement to pay the Fund's expenses, the Fund is obligated to pay the Adviser a fee (based on average daily net assets) of 1.70% computed and accrued daily and paid monthly. For the year ended September 30, 2001, the Adviser received a fee of $12,686 from the Fund. The Adviser has contractually agreed to reimburse the Fund for the fees and expenses of the non-interested person Trustees incurred by the Fund through February 1, 2002. For the year ended September 30, 2001, the Adviser reimbursed expenses of $2,123. On behalf of the Class A shares, the Fund has adopted a distribution plan (the "Distribution Plan") under Rule 12b-1 of the Investment Company Act of 1940, as amended. Under the Distribution Plan, the Fund is authorized to pay a fee in an amount not to exceed on an annual basis 0.25% of the average daily net asset value of the Class A shares. For the year ended September 30, 2001, the Fund incurred distribution expenses of $230 for Class A shares. For the year ended September 30, 2001, Westcott Securities LLC, a related broker/dealer under common control, which is registered with the Securities & Exchange Commission, received distribution fees of $7 from a total $230 from the Fund for expenses related to the sale of Class A shares. 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 Adviser 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. Both companies are wholly owned subsidiaries Westcott Technology Fund Notes to Financial Statements September 30, 2001 - continued NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued 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 for the year ended September 30, 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 year ended September 30, 2001, purchases and sales of investment securities, other than short term investments, aggregated $272,659 and $783,974, respectively. As of September 30, 2001, there was net unrealized depreciation of $102,549. The aggregate cost of securities for federal income tax purposes at September 30, 2001 was $687,361. The difference between book cost and tax cost consists of wash sales in the amount of $8,181. 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. RELATED PARTY TRANSACTIONS The Adviser is not a registered broker-dealer of securities, but is affiliated with Westcott Securities, LLC. Westcott Securities, LLC can receive commissions on trades made on behalf of the Fund. For the year ended September 30, 2001, Westcott Securities LLC received no brokerage fees and commissions from 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 September 30, 2001, Donaldson, Lufkin & Jenrette beneficially owned in aggregate more than 97% of Class A shares of the Fund and Donaldson, Lufkin & Jenrette beneficially owned in aggregate more than 97% of Class I shares of the Fund. NOTE 7. CAPITAL LOSS CARRYFORWARD At September 30, 2001, the Fund had available for federal tax purposes an unused capital loss carry forward of $2,053,274, of which $1,408,806 expires in 2008 and $644,468 expires in 2009. Independent Auditor's Report To the Shareholders and Trustees of Westcott Technology Fund (formerly Westcott Nothing But Net Fund) In planning and performing our audit of the financial statements of Westcott Technology Fund (the "Fund") for the year ended September 30, 2001, we considered its internal control, including control activities for safeguarding securities, in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N-SAR, not to provide assurance on internal control. The management of the Fund is responsible for establishing and maintaining internal control. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. Generally, controls that are relevant to an audit pertain to the entity's objective of preparing financial statements for external purposes that are fairly presented in conformity with generally accepted accounting principles. Those controls include the safeguarding of assets against unauthorized acquisition, use or disposition. Because of inherent limitations in internal control, errors or fraud may occur and not be detected. Also, projection of any evaluation of internal control to future periods is subject to the risk that it may become inadequate because of changes in conditions or that the effectiveness of the design and operation may deteriorate. Our consideration of internal control would not necessarily disclose all matters in internal control that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. However, we noted no matters involving internal control and its operation, including controls for safeguarding securities, that we consider to be material weaknesses as defined above as of September 30, 2001. This report is intended solely for the information and use of management and the Board of Trustees of the Fund and the Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties. McCurdy & Associates CPA's, Inc. Westlake, Ohio October 18, 2001 -----END PRIVACY-ENHANCED MESSAGE-----