-----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, T+gDJxNo3HSPwMeOUa4NfwpcaY4EswVK8q5G+uAtSQ+0P6MhdiWPInXw836dm28b hGNoMY3EMe0Vjj/qtKWQ/Q== 0001035449-03-000064.txt : 20030219 0001035449-03-000064.hdr.sgml : 20030219 20030219172513 ACCESSION NUMBER: 0001035449-03-000064 CONFORMED SUBMISSION TYPE: N-30D/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021031 FILED AS OF DATE: 20030219 EFFECTIVENESS DATE: 20030219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERIPRIME FUNDS CENTRAL INDEX KEY: 0001000579 IRS NUMBER: 752616671 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-09096 FILM NUMBER: 03573397 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/A 1 amp1002n30d.txt AMERIPRIME Dear Fellow Shareholders: October 31, 2002 We are pleased to present to you the financial statements for the GLOBALT Growth Fund, which ended the fiscal year on October 31, 2002. We invite all shareholders to review the management discussion and analysis below for a detailed discussion of the Fund's performance. We welcome our new shareholders and look forward to furthering the investment objectives of all our shareholders. We believe it is important to note that all eligible GLOBALT 401(k) plan participants have elected to be investors in the Fund and collectively are among the Fund's largest shareholders. As always, your questions and comments are welcome. We appreciate your confidence in the GLOBALT Growth Fund. Sincerely, Gary E. Fullam Chief Investment Officer For more complete information, including charges and expenses, obtain a prospectus by calling 1-877-289-4769. The prospectus should be read carefully before investing. The fund is distributed by Unified Financial Securities, Inc. Management Discussion & Analysis Investment Results - Fiscal Year Ended October 2002 As indicated by the following chart, the GLOBALT Growth Fund under-performed the S&P 500 in fiscal year 2002. Being a diversified index, the S&P 500 is comprised of both growth and value stocks. The Fund's performance is partially explained by the fact that growth strategies in general under-performed the broad market indices. Further perspective on these results is provided by the commentary that follows. Five Year Average Annual Total Return One Year Average Annual Since Inception Total Return Total Return (December 1, 1995) GLOBALT Growth Fund -21.77% -3.55% 4.14% S&P 500 -15.11% 0.73% 7.31% Russell 1000 Growth Index -19.62% -2.45% 4.50%
Growth of $25,000 Russell Period GGF S&P 500 1000 Growth - -------------- Oct-95 Dec-95 $25,000 $25,000 $25,000 Dec-95 $26,600 $25,483 $25,143 Jan-96 $27,600 $26,349 $25,984 Feb-96 $28,199 $26,594 $26,460 Mar-96 $28,549 $26,849 $26,495 Apr-96 $29,074 $27,244 $27,190 May-96 $29,400 $27,947 $28,142 Jun-96 $29,400 $28,053 $28,180 Jul-96 $28,074 $26,813 $26,537 Aug-96 $28,871 $27,379 $27,217 Sep-96 $30,647 $28,920 $29,198 Oct-96 $31,195 $29,718 $29,372 Nov-96 $33,295 $31,965 $31,577 Dec-96 $31,913 $31,332 $30,966 Jan-97 $33,914 $33,289 $33,133 Feb-97 $33,052 $33,550 $32,908 Mar-97 $31,558 $32,172 $31,128 Apr-97 $33,862 $34,092 $33,195 May-97 $35,836 $36,168 $35,597 Jun-97 $37,506 $37,788 $37,025 Jul-97 $40,773 $40,795 $40,303 Aug-97 $39,077 $38,510 $37,947 Sep-97 $40,902 $40,619 $39,814 Oct-97 $39,663 $39,262 $38,343 Nov-97 $40,424 $41,080 $39,967 Dec-97 $41,063 $41,785 $40,415 Jan-98 $41,342 $42,247 $41,623 Feb-98 $44,377 $45,294 $44,753 Mar-98 $46,382 $47,613 $46,539 Apr-98 $47,663 $48,092 $47,181 May-98 $46,466 $47,266 $45,841 Jun-98 $48,859 $49,186 $48,651 Jul-98 $48,219 $48,662 $48,330 Aug-98 $40,533 $41,626 $41,076 Sep-98 $42,203 $44,293 $44,231 Oct-98 $44,929 $47,894 $47,787 Nov-98 $47,854 $50,797 $51,423 Dec-98 $51,668 $53,724 $56,062 Jan-99 $54,438 $55,970 $59,353 Feb-99 $51,378 $54,231 $56,640 Mar-99 $52,925 $56,401 $59,625 Apr-99 $54,237 $58,585 $59,703 May-99 $53,451 $57,202 $57,870 Jun-99 $56,246 $60,376 $61,921 Jul-99 $54,266 $58,492 $59,951 Aug-99 $54,239 $58,199 $60,929 Sep-99 $53,306 $56,604 $59,649 Oct-99 $56,920 $60,187 $64,153 Nov-99 $59,749 $61,410 $67,611 Dec-99 $65,706 $65,028 $74,642 Jan-00 $61,416 $61,761 $71,141 Feb-00 $62,269 $60,591 $74,620 Mar-00 $66,379 $66,519 $79,963 Apr-00 $63,306 $64,517 $76,157 May-00 $60,748 $63,194 $72,318 Jun-00 $64,794 $64,755 $77,800 Jul-00 $63,544 $63,745 $74,556 Aug-00 $70,451 $67,704 $81,303 Sep-00 $66,344 $64,129 $73,612 Oct-00 $63,060 $63,859 $70,130 Nov-00 $54,780 $58,827 $59,793 Dec-00 $54,473 $59,116 $57,903 Jan-01 $57,153 $61,214 $61,905 Feb-01 $50,786 $55,631 $51,393 Mar-01 $46,475 $52,110 $45,802 Apr-01 $50,615 $56,159 $51,595 May-01 $51,030 $56,535 $50,837 Jun-01 $49,744 $55,161 $49,658 Jul-01 $48,839 $54,621 $48,416 Aug-01 $45,640 $51,202 $44,456 Sep-01 $40,319 $47,064 $40,019 Oct-01 $42,334 $47,962 $42,118 Nov-01 $45,289 $51,641 $46,166 Dec-01 $45,883 $52,094 $46,078 Jan-02 $44,456 $51,333 $45,263 Feb-02 $42,575 $50,344 $43,384 Mar-02 $44,385 $52,237 $44,885 Apr-02 $41,673 $49,070 $41,223 May-02 $40,698 $48,708 $40,225 Jun-02 $37,845 $45,238 $36,504 Jul-02 $34,125 $41,712 $34,497 Aug-02 $33,811 $41,986 $34,600 Sep-02 $31,238 $37,423 $31,012 Oct-02 $33,115 $40,716 $33,856
|X| Past performance is not predictive of future performance. |X| The GLOBALT Growth Fund's historical results are net of all expenses, versus the gross market benchmark (the S&P 500 Index). Investors are reminded that when trying to achieve benchmark returns, investment management fees, transaction costs and execution costs will be incurred. |X| The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |X| The S&P 500 Index is an unmanaged index of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The Index is adjusted for dividends and weighted toward stocks with large market capitalization. |X| Inception Date: December 1, 1995. Commentary and Outlook There is precedence for markets to overreact on the upside or the downside. In retrospect, from 1998 into 2000, the markets assumed what proved to be unrealistic expected growth rates and responded with unbounded enthusiasm. The extent and duration of the ensuing bear market cycle, however, has exceeded virtually everyone's expectations, including ours. Reflecting the unprecedented uncertainties of the period, the market has assumed what appears a life of its own, largely independent of the level either of the economy or stock valuations. Fear clearly dominates logic and history. Our sense is that intense selling in recent months represented capitulation by many investors, resulting in an oversold condition in the stock market. The unexpected rally that began October 10th provides some support for this contention. This period was remarkable as the strongest four-day rally since the post-depression recovery in 1933. We don't have a sense that there are no further obstacles, only that the market lows in July and the retesting in late-September/early-October were severe and have substantially purged the excesses of recent years. Simply put, we believe that despite remaining uncertainties, including the potential for conflict in Iraq, there is more reward than risk in the stock market. Valuation levels have become increasingly attractive, particularly for growth stocks, and we believe staying the course will prove to be the correct strategy given any reasonable timeframe. It is worth noting that growth strategies outperformed value strategies in the third quarter for the first time in many months, and that this has continued into the fourth quarter. We also fully realize that these have been very trying times for you as an investor or fiduciary. While we may lament the sometimes irrational market response to the uncertainties in the environment, we are intent on maintaining equilibrium and following our investment disciplines as the surest route to recovery. It is well for all of us to remember that bear markets often end before it is clear that the economy has turned upward or other uncertainties are resolved. This is the kind of environment in which stocks finally can exceed expectations. Since the close of the Fund's fiscal year on October 31st, stock prices are broadly higher; a trend we hope will persist. Fund Investment Shares of the Fund are sold on a continuous basis. Through the Fund's transfer agent, Unified Fund Services, you may invest any amount you choose as often as you wish, subject to a minimum initial investment of $25,000 and minimum subsequent investments of $5,000 ($2,000 for IRA accounts). Shares may also be purchased through a broker dealer or other financial institution authorized by the Fund's distributor (investors may be charged a fee for this service). Purchases can be made by mail or by bank wire (please see prospectus for more information). The Fund is also available through Fidelity's FUNDSNetwork with a minimum investment of $2,500 ($1,000 through a qualified retirement plan). It is listed as the AmeriPrime Funds - GLOBALT Growth Fund (symbol: GROWX). Fidelity can be reached at 1-800-343-3548 or on the Internet at www.fidelity.com. The Fund is also available through the Schwab Mutual Fund OneSource service at 1-800-435-4000 or on the Internet at www.schwab.com. The minimum investment in the Fund through this service is $2,500 ($1,000 through a qualified retirement plan). The GLOBALT Growth Fund's mutual fund symbol at Schwab is GROWX. The GLOBALT Growth Fund may be included as an investment option in 401(k) plans. GLOBALT Growth Fund Schedule of Investments October 31, 2002 Common Stocks - 94.4% Shares Value Accident & Health Insurance - 1.0% AFLAC, Inc. 2,600 $ 79,144 ---------------- Agriculture Chemicals - 1.0% Scotts Co. (The) Class A (a) 1,700 80,920 ---------------- Air Conditioning & Warm Air Heating Equipment - 1.1% American Standard Companies, Inc. (a) 1,300 86,710 ---------------- Air Courier Services - 0.9% FedEx Corp. 1,300 69,147 ---------------- Aircraft - 1.5% Northrop Grumman Corp. 1,100 113,443 ---------------- Beverages - 3.0% Coca-Cola Co. 5,000 232,400 ---------------- Biological Products (No Diagnostic Substances) - 5.3% Amgen, Inc. (a) 4,004 186,426 Gilead Sciences, Inc. (a) 2,200 76,428 IDEC Pharmaceuticals Corp. (a) 1,900 87,438 Medimmune, Inc. (a) 2,400 61,320 ---------------- ---------------- 411,612 ---------------- Cable & Other Pay Television Services - 0.9% Viacom, Inc. - Class B (a) 1,500 66,915 ---------------- Cleaning Preparations, Perfumes, Cosmetics - 1.3% Dial Corp. 4,700 99,922 ---------------- Computer Communication Equipment - 0.9% Cisco Systems, Inc. (a) 6,600 73,788 ---------------- Computer Hardware - Data Storage Devices - 0.3% Imation Corp. (a) 600 24,552 ---------------- Computer Services & Software - 1.7% Electronic Arts, Inc. (a) 2,000 130,240 ---------------- Computers & Office Equipment - 2.8% International Business Machines Corp. 1,600 126,304 Lexmark International, Inc. (a) 1,600 95,072 ---------------- ---------------- 221,376 ----------------
GLOBALT Growth Fund Schedule of Investments October 31, 2002 Common Stocks - 94.4% -continued Shares Value Construction Machinery & Equipment - 0.7% Caterpillar, Inc. 1,300 53,105 ---------------- Converted Paper & Paperboard Products (No Containers/Boxes) - 1.1% 3M Co. 700 88,858 ---------------- Crude Petroleum & Natural Gas - 2.7% Apache Corp. 900 48,654 EOG Resources, Inc. 1,700 61,200 Ocean Energy, Inc. 5,400 100,602 ---------------- ---------------- 210,456 ---------------- Drilling Oil & Gas Wells - 2.1% Ensco International, Inc. 2,700 73,008 Rowan Co., Inc. 4,500 91,755 ---------------- ---------------- 164,763 ---------------- Electromedical & Electrotherapeutic Apparatus - 0.6% Varian Medical Systems, Inc. (a) 1,000 48,220 ---------------- Electronic & Other Electrical Equipment (No Computer Equipment) - 1.5% Eaton Corp. 1,700 116,263 ---------------- Electronic Computers - 1.2% Dell Computer Corp. (a) 3,300 94,413 ---------------- Energy - Oil & Gas Equipment - 0.7% FMC Technologies Inc. (a) 3,100 57,350 ---------------- Finance Services - 1.1% Morgan Stanley Dean Witter & Co. 2,300 89,516 ---------------- Food - Dairy Products - 1.0% Dean Foods Company (a) 2,000 74,980 ---------------- General Industrial Machinery & Equipment - 0.5% Ingersoll-Rand Co. Ltd. 1,100 42,900 ---------------- Health Products & Services - 2.1% Health Management Associates, Inc. 5,100 97,512 Lincare Holdings Inc. (a) 1,900 64,733 ---------------- ---------------- 162,245 ---------------- Industrial Inorganic Chemicals - 1.2% Praxair, Inc. 1,700 92,650 ----------------
GLOBALT Growth Fund Schedule of Investments October 31, 2002 Common Stocks - 94.4% -continued Shares Value Industrial Instruments for Measurement, Display, and Control - 1.2% Danaher Corp. 1,600 92,560 ---------------- Insurance - Insurance Brokers - 0.8% Arthur J. Gallagher & Co. 2,300 61,686 ---------------- Insurance Agents Brokers & Services - 1.8% Marsh & McLennan Companies, Inc. 3,000 140,130 ---------------- Investment Advice - 2.2% Franklin Resources, Inc. 2,400 79,176 Investor's Financial Services Corp. 3,000 92,010 ---------------- ---------------- 171,186 ---------------- Leather & Leather Products - 0.6% Coach, Inc. (a) 1,600 47,600 ---------------- Metalworking Machinery & Equipment - 1.2% SPX Corp. (a) 2,200 92,422 ---------------- Miscellaneous Services - 1.4% Dun & Bradstreet Corp. (a) 2,900 105,995 ---------------- Oil & Gas Field Machinery & Equipment - 0.6% National-Oilwell, Inc. (a) 2,200 45,870 ---------------- Optical Instruments & Lenses - 0.3% KLA-Tencor Corp. (a) 700 24,927 ---------------- Orthopedic, Prosthetic & Surgical Appliances & Supplies - 1.6% Biomet, Inc. 4,300 126,678 ---------------- Perfumes, Cosmetics & Other Toilet Preparations - 2.9% Avon Products, Inc. 2,000 96,980 Colgate-Palmolive Co. 2,400 131,952 ---------------- ---------------- 228,932 ----------------
GLOBALT Growth Fund Schedule of Investments October 31, 2002 Common Stocks - 94.4% -continued Shares Value Pharmaceutical Preparations - 11.4% Abbott Laboratories, Inc. 2,900 121,423 Allergan, Inc. 1,700 92,565 Barr Laboratories, Inc. (a) 800 47,064 Cephalon, Inc. (a) 1,400 70,378 Forest Labs, Inc. (a) 400 39,196 Icos Corp. (a) 2,900 71,659 Johnson & Johnson 3,624 212,910 Eli Lilly and Co. 1,500 83,250 Pharmacia Corp. 1,100 47,300 Wyeth 3,200 107,200 ---------------- ---------------- 892,945 ---------------- Radio & TV Broadcast & Communications Equipment - 1.6% L 3 Communications Holdings, Inc. (a) 2,600 122,200 ---------------- Radio & TV Broadcasting & Communications Equipment - 0.9% Harris Corp. 2,600 68,588 ---------------- Radiotelephone Communications - 0.9% NEXTEL Communications, Inc. - Class A (a) 6,500 73,320 ---------------- Retail - Catalog & Mail - Order Houses - 0.8% CDW Computer Centers, Inc. (a) 1,200 63,624 ---------------- Retail - Eating Places - 1.2% Darden Restaurants, Inc. 2,400 45,552 Wendy's International, Inc. 1,400 44,352 ---------------- ---------------- 89,904 ---------------- Retail - Jewelry Stores - 1.0% Tiffany & Co. 2,900 75,922 ---------------- Retail - Variety Stores - 2.4% Costco Wholesale Corp. (a) 1,500 50,895 Wal-Mart Stores, Inc. 2,600 139,230 ---------------- ---------------- 190,125 ---------------- Security Brokers, Dealers & Flotation Companies - 2.1% Goldman Sachs Group, Inc. 2,300 164,680 ----------------
GLOBALT Growth Fund Schedule of Investments October 31, 2002 Common Stocks - 94.4% -continued Shares Value Semiconductors & Related Devices - 3.5% International Rectifier Corp. (a) 1,500 25,905 Marvell Technology Group Ltd. (a) 4,500 72,945 Maxim Integrated Products, Inc. 1,000 31,840 Microchip Technology, Inc. 3,100 75,640 Texas Instruments, Inc. 4,200 66,612 ---------------- ---------------- 272,942 ---------------- Services - Business Services - 1.9% eBAY, Inc. (a) 2,400 151,776 ---------------- Services - Computer Integrated Systems Design - 1.0% Titan Corp. (a) 6,000 77,340 ---------------- Services - Computer Processing & Data Preparation - 0.8% Acxiom Corp. (a) 5,000 63,000 ---------------- Services - Help Supply Services - 1.2% Manpower, Inc. 2,700 92,070 ---------------- Services - Prepackaged Software - 3.9% Brocade Communications Systems, Inc. (a) 4,100 28,167 Intuit, Inc. (a) 2,100 109,032 Microsoft Corp. (a) 1,700 90,899 Symantec Corp. (a) 2,000 80,000 ---------------- ---------------- 308,098 ---------------- Services - Specialty Facilities - 0.9% Caremark RX, Inc. (a) 4,000 70,800 ---------------- Special Industry Machinery - 0.4% Applied Materials, Inc. (a) 1,900 28,557 ---------------- Specialty Cleaning, Polishing and Sanitation Preparations - 0.8% Clorox Corp. 1,400 62,902 ---------------- Surety Insurance - 2.3% Ambac Financial Group, Inc. 2,900 179,220 ---------------- Textiles & Apparel - 1.4% Nike, Inc. - Class B 2,400 113,256 ----------------
GLOBALT Growth Fund Schedule of Investments October 31, 2002 Common Stocks - 94.4% -continued Shares Value Trucking & Courier Services (No Air) - 1.2% United Parcel Services, Inc. Class B 1,500 90,015 ---------------- TOTAL COMMON STOCKS (Cost $7,520,395) 7,375,158 ---------------- Unit Investment Trusts - 3.0% NASDAQ-100 Trust Series 1 (a) 9,500 233,415 ---------------- TOTAL UNIT INVESTMENT TRUSTS (Cost $236,590) 233,415 ---------------- Money Market Securities - 3.3% Huntington Money Market Fund - Investment A, 0.67%, (Cost $264,035) (b) 264,035 264,035 ---------------- TOTAL INVESTMENTS (Cost $8,021,020) - 100.7% $ 7,872,608 ---------------- Liabilities in excess of cash and other assets - (0.7%) (56,085) ---------------- TOTAL NET ASSETS - 100.0% $ 7,816,523 ================
(a) Non-income producing. (b) Variable rate security; the coupon rate shown represents the rate at October 31, 2002. GLOBALT Growth Fund Statement of Assets and Liabilities October 31, 2002 Assets Investments in securities, at value (cost $8,021,020) $ 7,872,608 Interest receivable 63 Dividends receivable 4,724 Receivable for investments sold 50,669 Receivable for fund shares sold 268 --------------- Total assets 7,928,332 --------------- Liabilities Accrued advisory fees 7,593 Other payables and accrued expenses 22,072 Payable for investments purchased 82,144 --------------- Total liabilities 111,809 --------------- Net Assets $ 7,816,523 =============== Net Assets consist of: Paid in capital 13,080,239 Accumulated net realized gain (loss) on investments (5,115,304) Net unrealized appreciation (depreciation) on investments (148,412) --------------- Net Assets, for 820,814 shares $ 7,816,523 =============== Net Assets Value Net Assets Offering price and redemption price per share ($7,816,523 / 820,814) $ 9.52 ===============
GLOBALT Growth Fund Statement of Operations Year ended October 31, 2002 Investment Income Dividend income $ 71,766 Interest income 2,137 ---------------- Total Income 73,903 ---------------- Expenses Investment advisor fee 126,084 Trustee expenses 2,463 ---------------- Total Expenses 128,547 Reimbursed expenses (2,463) ---------------- ---------------- Total operating expenses 126,084 ---------------- ---------------- Net Investment Income (Loss) (52,181) ---------------- Realized & Unrealized Gain (Loss) Net realized gain (loss) on investment securities (2,642,528) Change in net unrealized appreciation (depreciation) on investment securities 464,403 ---------------- ---------------- Net realized and unrealized gain (loss) on investment securities (2,178,125) ---------------- ---------------- Net increase (decrease) in net assets resulting from operations $ (2,230,306) ================
GLOBALT Growth Fund Statement of Changes In Net Assets Year ended Year ended Increase (Decrease) in Net Assets Oct. 31, 2002 Oct. 31, 2001 ----------------------------------------- Operations Net investment income (loss) $ (52,181) $ (74,122) Net realized gain (loss) on investment securities (2,642,528) (2,509,074) Change in net unrealized appreciation (depreciation) 464,403 (4,202,913) ----------------------------------------- ----------------------------------------- Net increase (decrease) in net assets resulting from operations (2,230,306) (6,786,109) ----------------------------------------- Distributions From net investment income - - From net realized gain - (2,156,584) ----------------------------------------- ----------------------------------------- Total distributions - (2,156,584) ----------------------------------------- Capital Share Transactions Proceeds from shares sold 632,918 4,535,944 Reinvestment of distributions - 2,156,481 Amount paid for shares repurchased (3,531,772) (5,913,792) ----------------------------------------- Net increase (decrease) in net assets resulting from share transactions (2,898,854) 778,633 ----------------------------------------- ----------------------------------------- Total Increase (Decrease) in Net Assets (5,129,160) (8,164,060) ----------------------------------------- Net Assets Beginning of period 12,945,683 21,109,743 ----------------------------------------- End of period $ 7,816,523 $ 12,945,683 ========================================= Capital Share Transactions Shares sold 56,917 321,044 Shares issued in reinvestment of distributions - 143,670 Shares repurchased (299,507) (420,336) ----------------------------------------- Net increase (decrease) from capital transactions (242,590) 44,378 =========================================
GLOBALT Growth Fund Financial Highlights Year ended Year ended Year ended Year ended Year ended Oct. 31, 2002 Oct. 31, 2001 Oct. 31, 2000 Oct. 31, 1999 Oct. 31, 1998 ---------------- ---------------- --------------- --------------- ---------------- Selected Per Share Data Net asset value, beginning of period $ 12.17 $ 20.72 $ 19.53 $ 16.14 $ 15.66 ---------------- ---------------- --------------- --------------- ---------------- Income from investment operations Net investment income (loss) (0.06) (0.07) (0.09) (0.05) 0.02 Net realized and unrealized gain (loss) (2.59) (6.33) 2.23 4.27 1.86 ---------------- ---------------- --------------- --------------- ---------------- ---------------- ---------------- --------------- --------------- ---------------- Total from investment operations (2.65) (6.40) 2.14 4.22 1.88 ---------------- ---------------- --------------- --------------- ---------------- Less Distributions to shareholders: From net investment income 0.00 0.00 0.00 (0.02) (0.01) From net realized gain 0.00 (2.15) (0.95) (0.81) (1.39) ---------------- ---------------- --------------- --------------- ---------------- ---------------- ---------------- --------------- --------------- ---------------- Total distributions 0.00 (2.15) (0.95) (0.83) (1.40) ---------------- ---------------- --------------- --------------- ---------------- Net asset value, end of period $ 9.52 $ 12.17 $ 20.72 $ 19.53 $ 16.14 ================ ================ =============== =============== ================ Total Return (21.77)% (32.87)% 10.78% 26.67% 13.28% Ratios and Supplemental Data Net assets, end of period (000) $ 7,817 $ 12,946 $ 21,110 $ 16,934 $ 11,709 Ratio of expenses to average net assets 1.17% 1.30% 1.18% 1.17% 1.17% Ratio of expenses to average net assets before waiver & reimbursement 1.20% 1.32% 1.18% 1.18% 1.19% Ratio of net investment income to average net assets (0.49)% (0.44)% (0.45)% (0.27)% 0.14% Ratio of net investment income to average net assets before waiver & reimbursement (0.51)% (0.46)% (0.45)% (0.28)% 0.12% Portfolio turnover rate 180.19% 244.82% 159.09% 120.46% 83.78%
GLOBALT Growth Fund Notes to Financial Statements October 31, 2002 NOTE 1. ORGANIZATION GLOBALT Growth Fund (the "Fund") was organized as a diversified series of the AmeriPrime Funds (the "Trust") on October 20, 1995 and commenced operations on December 1, 1995. The Trust is 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 of separate series 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. 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 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 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 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. GLOBALT Growth Fund Notes to Financial Statements October 31, 2002 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 principles require that permanent financial reporting differences relating to shareholder distributions be reclassified to paid in capital. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains GLOBALT, Inc. (the "Adviser") to manage the Fund's investments. The Adviser was organized as a Georgia corporation in 1990. Samuel Allen was the controlling shareholder of GLOBALT, Inc. until May 31, 2002, when Synovus Financial Corp. ("Synovus") acquired all outstanding shares of the adviser. Synovus may be deemed to be a controlling person of the Adviser due to its ownership of 100% of the outstanding shares of the Adviser. Synovus is a financial services company. The investment decisions for the Fund are made by a committee of the Adviser that 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), fees and expenses of the non-interested person Trustees and extraordinary expenses. In addition, if a distribution plan is adopted by the Fund's shareholders pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Plan"), the Fund would pay any expenses it is authorized to pay pursuant to the Plan. As compensation for its management services and agreement to pay the Fund's expenses, the Fund is obligated to pay the Adviser a fee at the annual rate of 1.17% of the average value of its daily net assets. It should be noted that most investment companies pay their own operating expenses directly, while the Fund's expenses, except those specified above, are paid by the Adviser. For the year ended October 31, 2002, the Adviser earned a fee of $126,084 from the Fund. The Adviser has contractually agreed to reimburse fees and other expenses to the extent necessary to maintain total operating expenses at the annual rate of 1.17% through February 28, 2005. For the year ended October 31, 2002, the Adviser reimbursed expenses of $2,463. The Fund retains Unified Fund Services, Inc. ("Unified"), a wholly owned subsidiary of Unified Financial Services, Inc., 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 Agreement. A Trustee of the Trust is a member of management of Unified, and the officers of the Trust are a director and officer, respectively, of Unified. The Fund retains Unified Financial Securities, Inc., a wholly owned subsidiary of Unified Financial Services, Inc., to act as the principal distributor of its shares. There were no payments made to Unified Financial Securities, Inc. during the fiscal year ended October 31, 2002. Kenneth D. Trumpfheller, a Trustee of the Trust, is a registered principal of, and may be deemed to be an affiliate of, the Distributor. Timothy Ashburn and Thomas Napurano are a director and officer, respectively, of the Distributor and the Distributor's parent company, and may be deemed to be affiliates of the Distributor. GLOBALT Growth Fund Notes to Financial Statements October 31, 2002 NOTE 4. INVESTMENTS For the year ended October 31, 2002, purchases and sales of investment securities, other than short term investments, aggregated $18,980,731 and $21,004,015, respectively. The unrealized appreciation for all securities totaled $463,387 and the unrealized depreciation for all securities totaled $648,757 for a net unrealized depreciation of $185,370. The aggregate cost of securities for federal income tax purposes at October 31, 2002 was $8,057,978. The difference between book cost and tax cost consists of wash sales in the amount of $36,958. 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. CAPITAL LOSS CARRYFORWARDS At October 31, 2002, the fund had available for federal tax purposes an unused capital loss carryforward of $2,379,244 which expires in 2009. Capital loss carryforwards are available to offset future realized capital gains. To the extent that these carryforwards are used to offset future capital gains, it is probable that the amount, which is offset, will not be distributed to shareholders. The fund elected to defer post-October losses of $2,642,528. NOTE 7. DISTRIBUTION TO SHAREHOLDERS There were no distributions in the fiscal year ended October 31, 2002. The tax character of distributions paid during the fiscal years 2002 and 2001 were as follows: Distributions paid from: 2002 2001 ------------ --------------- Ordinary Income 0 0 Short-Term Capital Gain 0 0 Long-Term Capital Gain 0 2,156,584 ------------ --------------- $ - $ 2,156,584 ============ =============== As of October 31, 2002, the components of distributable earnings/(accumulated losses) on a tax basis were as follows: Undistributable ordinary income/(accumulated losses) $ - Undistributable long-term capital gain/(accumulated losses) (2,435,818) Unrealized appreciation/(depreciation) (2,827,898) ---------------- $ (5,263,716) ================ The difference between book basis and tax basis unrealized appreciation/depreciation is attributable to the tax deferral of losses on wash sales and post-October losses. GLOBALT Growth Fund Notes to Financial Statements October 31, 2002 NOTE 8. ELECTION OF TRUSTEES-(unaudited) At a special meeting of the shareholders held on May 29, 2002, a vote was held to elect members to serve on the Board of Trustees. The vote tally for each Trustee is as follows: For Withheld Total Gary Hippenstiel 10,516,210.432 648,472.896 11,164,683.328 Mark Muller 10,856,443.432 308,239.896 11,164,683.328 Ken Trumpfheller 10,493,506.432 671,176.896 11,164,683.328 Richard Wright 10,858,138.432 306,544.896 11,164,683.328
NOTE 9. SHAREHOLDER VOTE FOR NEW MANAGEMENT AGREEMENT-(unaudited) On May 31, 2002, Synovus Financial Corp. ("Synovus") acquired 100% of the outstanding shares of the Adviser through a merger of a wholly owned subsidiary of Synovus with and into the Adviser. Pursuant to the Investment Company Act of 1940, as amended (the "Investment Company Act"), a transaction which results in a change of control of an investment adviser may be deemed an "assignment". The Investment Company Act further provides that a management agreement will automatically terminate in the event of an assignment. The transaction described above resulted in a "change in control" of the Adviser for the purposes of the Investment Company Act and caused the "assignment" and resulting termination of the old management agreement. In anticipation of the change of control, a special meeting of shareholders was held on May 24, 2002. The shareholders approved a new management agreement that is substantially identical in all material respects to the old management agreement. The new agreement was effective on May 31, 2002, the date of the change of control. The vote tally is as follows: For Approval Against Approval Total 547,203 0 547,203 The following table provides information regarding each Trustee who is not an "interested person" of the Trust, as defined in the Investment Company Act of 1940. Number of Portfolios Position(s) Held Length of in Fund Complex1 Name, Age and Address with Trust Time Served Overseen by Trustee Gary E. Hippenstiel Trustee Trustee since 1995 29 600 Jefferson Street Suite 350 Houston, TX 77002 Year of Birth: 1947
Principal Occupations During Past 5 Years Other Directorships Held by Trustee Director, Vice President and Chief Investment Officer of Legacy None Trust Company since 1992.
Number of Portfolios Position(s) Held Length of in Fund Complex1 Name, Age and Address with Trust Time Served Overseen by Trustee Mark W. Muller Trustee Trustee since 2002 29 5016 Cedar River Tr. Ft. Worth, TX 76137 Year of Birth: 1964
Principal Occupations During Past 5 Years Other Directorships Held by Trustee Trustee of AmeriPrime Advisors Trust since 1999. President of None JAMAR Resources, Inc., a manufacturers representative firm, September 2001 to present. Account Manager for SCI, Inc., a custom manufacturer, from April 2002 to September 2001. Account Manager for Clarion Technologies, a manufacturer of automotive, heavy truck, and consumer goods, from 1996 to April 2000.
Number of Portfolios Position(s) Held Length of in Fund Complex1 Name, Age and Address with Trust Time Served Overseen by Trustee Richard J. Wright, Jr. Trustee Trustee since 2002 29 13532 N. Central Expressway MS 3800 Dallas, TX 75243 Year of Birth: 1962
Principal Occupations During Past 5 Years Other Directorships Held by Trustee Trustee of AmeriPrime Advisors Trust since 1999. Various None positions with Texas Instruments, a technology company, since 1985, including the following: Program Manager for Semi- Conductor Business Opportunity Management System, 1998 to present; Development Manager for we-based interface, 1999 to present; Systems Manager for Semi-Conductor Business Opportunity Management System, 1997 to 1998; Development Manager for Acquisition Manager, 1996-1997; Operations Manager for Procurement Systems, 1994-1997.
The following table provides information regarding each Trustee who is an "interested person" of the Trust, as defined in the Investment Company Act of 1940, and each officer of the Trust. Number of Portfolios Position(s) In Length of in Fund Complex1 Name, Age and Address Fund Complex Time Served Overseen by Trustee Kenneth D. Trumpfheller2 Trustee Since 1995 29 1725 E. Southlake Blvd. Suite 200 Southlake, Texas 76092 Year of Birth: 1958
Principal Occupations During Past 5 Years Other Directorships Held by Trustee President and Managing Director of Unified Fund Services, Inc., None the Fund's transfer agent, fund accountant and administrator, since October 2000. President, Treasurer, and Secretary of Ameriprime Financial Services, Inc., a fund administrator, (which merged with Unified Fund Services, Inc.) from 1994 through October 2000. President, Treasurer and Secretary of Ameriprime Financial Securities, Inc., the Trust's distributor through December 2000, from 1994 through December 2000.
Number of Portfolios Position(s) Held Length of in Fund Complex1 Name, Age and Address with Trust Time Served Overseen by Trustee Timothy Ashburn3 President and Secretary Since October 2002 N/A 2424 Harrodsburg Road Lexington, KY 40503 Year of Birth: 1950
Principal Occupations During Past 5 Years Other Directorships Held by Trustee Chairman of Unified Financial Services, Inc. since 1989 and N/A Chief Executive Officer from 1989 to 1992 and 1994 to April 2002; President of Unified Financial Services from November 1997 to April 2000.
Number of Portfolios Position(s) In Length of in Fund Complex1 Name, Age and Address Fund Complex Time Served Overseen by Trustee Thomas G. Napurano Treasurer and Chief Since October 2002 N/A 2424 Harrodsburg Road Finacial Officer Lexington, KY 40503 Year of Birth: 1941
Principal Occupations During Past 5 Years Other Directorships Held by Trustee Chief Financial Officer and Executive Vice President of Unified N/A Finacial Services, Inc., the parent company of the Trust's administrator and principal underwriter; member the board of directors of Unified Financial Services, Inc. from 1989 to March 2002.
1 The term "fund complex" refers to the AmeriPrime Funds and the Ameriprime Advisors Trust. 2 Mr. Trumpfheller may be deemed to be an "interested person" of the Trust because he is a registered principal of the Trust's distributor 3 Mr. Ashburn is an "interested person" of the Trust because he is an officer of the Trust. In addition, he may be deemed to be an "interested person" of the Trust because he is Chairman of Unified Financial Services, Inc., the parent of the principal underwriter for the Funds. INDEPENDENT AUDITOR'S REPORT To the Shareholders and Board of Trustees GLOBALT Growth Fund (a series of AmeriPrime Funds) We have audited the accompanying statement of assets and liabilities of the GLOBALT Growth Fund, including the schedule of portfolio investments as of October 31, 2002, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five 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. 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 securities owned as of October 31, 2002, 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 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 the GLOBALT Growth Fund as of October 31, 2002, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. McCurdy & Associates CPA's, Inc. Westlake, Ohio November 14, 2002 October 31, 2002 Dear Fellow Shareholders: For a discussion of Marathon Value Portfolio's performance during the period ended October 31, 2002, please see the "Management Discussion" in the annual report. As I mentioned in our April 30th letter, we are an equity fund and I did expect some punishment in the current period. The market as a whole provided no pleasant surprises. It was trick rather than treat. Nevertheless, my goal to shield you from some of the market's downward force was accomplished. I am providing investors in this fund a one-stop shopping place for, what I believe are, the best opportunities and values in the U.S. equity markets. Therefore, I am not wedded to purity of style. I believe that most mutual fund investors have a difficult time deciding whether to invest in a large or small capitalization, value, or growth vehicle. So this fund takes the responsibility to search out the best values wherever they lie. For example, as a natural value investor, I have had qualms until recently about the information technology areas, but still have kept about 10% of the fund's assets there. While that sector is still beset by overcapacity, there are companies with sustained competitive edges within the group and I expect to continue to forage in that area. I expect that the market will continue to provide periods when it is possible to buy outstanding companies at below-average prices or cut-rate bargains. I will occasionally make an investment in a less-than-excellent company if the price discount is extraordinary. For that reason, the fund continues to maintain some cash reserves, although less than we have previously held. Finally, I want to briefly comment on the current crisis of confidence in corporate leadership. As those of you who care to listen to me, have heard many times over the last decade, there clearly has been a diminishing sense of responsibility on the part of some top-executive officers for their employees and shareholders. The harm that such an attitude does to American business is now apparent. Some changes have long been needed. It is a characteristic of our American system that we cannot act in advance of a crisis, and that our response afterward is often a barrage of regulations and the delivery of power to bureaucracies who have failed in their mission because they were preoccupied with their routines and paperwork. Such a response can also do harm to business. But like airport searches, the new burdens are shared equally by the innocent and the guilty. Perhaps we can devise ways in which the burden imposed by malfeasance be borne by those who have shown themselves unworthy of trust. Is it not time that America rediscover the meaning of discrimination in the best sense of the word - the ability to choose wisely? Throughout the course of the year, we will continue to update the fund's top ten holdings and performance results on our website www.marathonvalue.com. I have worked hard to deliver the fund's superior results. My single-mindedness is made possible by the support of Spectrum Advisory's associates and I thank them for their support. Because the challenge of managing money today is so great, I derive a great deal of satisfaction from the privilege of serving you and my private clients. I look forward to reporting to you on our future results and again thank those of you who are recommending the fund to your friends and family. Sincerely, Marc S. Heilweil For more complete information, including charges and expenses, obtain a prospectus by calling 1-800-788-6086. The prospectus should be read carefully before investing. The fund is distributed by Unified Financial Securities, Inc. MANAGEMENT DISCUSSION Once again, Marathon Value Portfolio ("Marathon") performed relatively well, substantially beating its S&P 500 benchmark. For the 12-month period ended October 31, 2002, total return of Marathon was -8.2% while for the same period the S&P 500 was down -15.1%. Since inception, March 28, 2000, through October 31, 2002, Marathon's total return was +5.5%; the S&P 500 total return for the same period was -39.2%. While in previous discussions we have been able to talk of substantial contributors to a positive return, this discussion must state that the main reason for Marathon's outperformance this year is that we avoided large losses on most of our major holdings. Unlike many funds, this year's -8.2% fund loss can quickly be recovered in a strong market. PERFORMANCE SUMMARY Returns for the period March 28, 2000 through October 31, 2002 - --------------------- ---------- ---------- ---------- ------------ --------------- ---------------- ----------------- 2000* 2001 2002* 12 Months Total Return Average Annual Final Value of a Since Return Since $10,000 Inception* Inception* Investment - --------------------- ---------- ---------- ---------- ------------ --------------- ---------------- ----------------- - --------------------- ---------- ---------- ---------- ------------ --------------- ---------------- ----------------- 16.1% 4.7% -13.1% -8.2% 5.5% 2.1% $10,554 Marathon Value Portfolio - --------------------- ---------- ---------- ---------- ------------ --------------- ---------------- ----------------- - --------------------- ---------- ---------- ---------- ------------ --------------- ---------------- ----------------- S&P 500 -11.7% -11.9% -21.8% -15.1% -39.2% -17.4% $6,083 - --------------------- ---------- ---------- ---------- ------------ --------------- ---------------- -----------------
*March 28, 2000 is the date Spectrum Advisory Services, Inc. assumed management of the fund. Returns for 2000 are from 03/28/00 through 12/31/00. Returns for 2002 are from 12/31/01 through 10/31/02. Returns are not annualized. MVP S&P 500 3/28/00 10,000.00 10,000.00 3/31/00 10,000.00 9,940.72 4/30/00 10,504.29 9,641.69 5/31/00 10,643.78 9,443.87 6/30/00 10,557.94 9,676.70 7/31/00 10,643.78 9,525.41 8/31/00 10,987.12 10,117.07 9/30/00 10,772.53 9,582.96 10/31/00 11,137.34 9,542.45 11/30/00 10,987.12 8,790.12 12/31/00 11,606.01 8,833.15 1/31/01 11,962.95 9,146.54 2/28/01 11,800.70 8,312.54 3/31/01 11,422.13 7,785.94 4/30/01 11,887.24 8,390.98 5/31/01 12,244.18 8,447.20 6/30/01 12,038.67 8,241.61 7/31/01 12,103.56 8,160.48 8/31/01 11,952.13 7,649.62 9/30/01 11,335.60 7,031.89 10/31/01 11,497.84 7,165.98 11/30/01 11,941.32 7,715.66 12/31/01 12,150.93 7,783.25 1/31/02 11,910.31 7,669.67 2/28/02 11,932.19 7,521.76 3/31/02 12,380.60 7,804.65 4/30/02 12,194.67 7,331.47 5/31/02 12,216.55 7,277.46 6/30/02 11,604.08 6,759.01 7/31/02 10,925.99 6,232.32 8/31/02 10,936.93 6,273.10 9/30/02 10,116.66 5,591.34 10/31/02 10,554.14 6,083.47
*This chart shows the value of a hypothetical initial investment of $10,000 in the Fund and the S&P 500 Index on March 28, 2000 (commencement of operations under Spectrum) and held through October 31, 2002. The S&P 500 Index is a widely recognized unmanaged index of common stocks. Performance figures reflect the change in value of the stocks in the index, reflect reinvestment of dividends and are not annualized. The index returns do not reflect expenses, which have been deducted from the Fund's return. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Periods prior to March 28, 2000, when another investment advisor managed the Fund, are not shown. THE FUND'S RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF FUTURE RESULTS. As you might expect given our returns and the market backdrop this year, Marathon's individual holdings have displayed a wide range of returns, so let's look at a few of the highs, lows, and in-betweens. After making senior management changes, 3M changed its official name and has focused more on cost cutting and new product development. The weakening dollar has also benefited 3M's high level of international sales. Zebra Technologies has seen greater application of its barcode labeling products and, despite the weakness in IT spending, has been a great holding within a difficult sector. Williams, stung by the virtual collapse of the energy trading market and the related post-Enron fallout--and despite its many valuable assets--has been the biggest drag on performance. While the drug sector was not popular, our large holding in Merck held up well. We still favor Merck's R&D capabilities and its chances of bringing out new blockbuster drugs in the next few years. The major pharmaceutical firms' efforts to get more new drugs approved have led to increased outsourcing in the development area. Pharmaceutical Product Development has responded with strong new business wins, a growing backlog, and large revenue gains. Although this was a more recent addition to the Fund, it has been one of the biggest contributors to the Fund's performance. Our international holdings continue to provide some diversification, but not a positive return. DSM N.V. is a Netherlands-based global chemical company that will count itself the leading manufacturer of vitamin ingredients in addition to its sales of $7 billion of other chemical products. Unlike comparable U.S. companies, we were able to purchase it at a single-digit earnings multiple. Cardinal Health illustrates the opportunities in today's market. It sold off early this summer because of rumors about its relationship with its former auditor, Arthur Anderson. Since we know the company well, we had no such doubts and ignored the rumors. Such opportunities favor those with a sound understanding of businesses. We believe we should continue to benefit from this environment, which is likely to persist for some time. Marathon Value Fund Schedule of Investments October 31, 2002 Common Stocks - 79.5% Shares Value NETHERLANDS - 0.6% Specialty Chemicals - 0.6% DSM NV (a) 1,500 63,428 --------------- 63,428 --------------- SWITZERLAND - 0.8% Property & Casualty Insurance - 0.8% Swiss Reinsurance (a) 1,200 83,322 --------------- 83,322 --------------- Advertising - 0.2% The Interpublic Group of Co., Inc. 2,000 23,940 --------------- Aerospace-Defense - 0.7% Northrop Grumman Corp. 700 72,191 --------------- Apparel & Accessories - 1.3% Jones Apparel Group, Inc. (a) 3,900 135,096 --------------- Automobiles, Parts & Equipment - 1.8% Cooper Tire & Rubber Co. 5,700 74,157 Toyota Motor Corp. (c) 2,300 111,780 --------------- --------------- 185,937 --------------- Banking - 4.1% Mitsubishi Tokyo Financial Group, Inc (c) 7,200 46,152 Popular, Inc. 3,000 97,170 SouthTrust Corp. 3,900 99,918 Synovus Financial Corp. 2,500 51,225 U.S. Bancorp 6,530 137,718 --------------- --------------- 432,183 --------------- Biotechnology - 1.2% Amgen, Inc. (a) 2,300 107,088 EntreMed, Inc. (a) 6,800 11,288 --------------- --------------- 118,376 --------------- Construction Materials - 2.1% Martin Marietta Materials, Inc. 5,500 153,120 Vulcan Materials Co. 1,800 60,408 --------------- --------------- 213,528 ---------------
Marathon Value Fund Schedule of Investments October 31, 2002 Common Stocks - 79.5%-continued Shares Value Diversified Financial Services - 1.5% Moody's Corp. 3,200 150,720 --------------- Electric Utilities - 0.7% Allegheny Energy, Inc. 2,000 11,400 Dominion Resources, Inc. 806 38,688 Korea Electric Power Corp. (c) 2,000 16,820 --------------- --------------- 66,908 --------------- Electric Components & Equipment - 4.5% Sanmina Corp. (a) 11,768 36,245 Vishay Intertechnology, Inc. (a) 6,000 61,800 Woodward Governor Co. 1,700 64,651 Texas Instruments, Inc. 2,300 36,478 Zebra Technologies Corp. (a) 4,300 264,536 --------------- --------------- 463,710 --------------- Energy - 1.3% BP PLC (c) 3,000 115,350 Williams Companies, Inc. 12,000 22,560 --------------- --------------- 137,910 --------------- Food & Drug Retail - 0.7% Delhaize Group (c) 2,600 40,300 Rite Aid Corp. (a) 16,000 28,640 --------------- --------------- 68,940 --------------- General Merchandise Stores - 1.4% Costco Wholesale Corp. (a) 4,300 145,899 --------------- Healthcare Distribution & Services - 5.4% Cardinal Health, Inc. 3,800 262,998 IMS Health, Inc. 6,500 97,760 Pharmaceutical Product Development, Inc. (a) 7,000 191,800 --------------- --------------- 552,558 --------------- Healthcare Equipment - 3.6% Applied Biosystems, Inc. 4,000 80,920 Beckton, Dickinson & Co. 6,700 197,717 Dionex Corp. (a) 3,000 92,430 --------------- --------------- 371,067 ---------------
Marathon Value Fund Schedule of Investments October 31, 2002 Common Stocks - 79.5%-continued Shares Value Household Products - 2.8% Kimberly-Clark Corp. 4,300 221,450 Tupperware Corp. 3,900 62,946 --------------- --------------- 284,396 --------------- Industrial Conglomerates - 5.1% 3M Co. 1,500 190,410 Eaton Corp. 1,400 95,746 General Electric Co. 3,600 90,900 Leggett & Platt, Inc. 5,500 114,675 Tyco International Ltd. 2,000 28,920 --------------- --------------- 520,651 --------------- Industrial Machinery - 1.9% Illinois Tool Works, Inc. 1,600 98,240 Lawson Products, Inc. 1,600 45,918 Lincoln Electric Holdings, Inc. 2,300 54,142 --------------- --------------- 198,300 --------------- Marine & Rail Transport - 1.5% Florida East Coast Industries, Inc. - Class A 2,000 47,800 Kirby Corp. (a) 4,300 101,523 --------------- --------------- 149,323 --------------- Oil & Gas Equipment & Services - 1.6% BJ Services Co. (a) 5,500 166,815 --------------- Packaged Foods - 3.6% Campbell Soup Co. 8,700 183,396 Sensient Technologies Corp. 7,700 187,495 --------------- --------------- 370,891 --------------- Paper/Forest Products - 1.7% Greif Brothers Corp. Class B 2,700 69,525 Plum Creek Timber Co., Inc. 4,470 101,067 --------------- 170,592 --------------- Pharmaceutical - 5.1% Abbott Laboratories, Inc. 4,800 200,976 Bristol-Myers Squibb, Inc. 2,000 49,220 Merck & Co., Inc. 5,100 276,624 --------------- --------------- 526,820 ---------------
Marathon Value Fund Schedule of Investments October 31, 2002 Common Stocks - 79.5%-continued Shares Value Property & Casualty Insurance - 4.1% Berkshire Hathaway, Inc. - Class B (a) 100 246,000 Chubb Corp. 2,200 124,102 Millea Holdings Inc. (c) 1,300 48,138 --------------- --------------- 418,240 --------------- Publishing, Printing & Media - 3.9% Gannett Co., Inc. 1,200 91,116 Liberty Media Corp. Class A 18,900 156,303 Wiley (John) & Sons, Inc. Class A 7,000 153,860 --------------- --------------- 401,279 --------------- Real Estate - 4.2% Alexanders Inc. (a) 700 44,975 Avatar Holdings, Inc. (a) 2,200 48,884 Crescent Real Estate Equities Trust 6,000 88,500 EastGroup Properties, Inc. 2,800 67,928 Federal Realty Investment Trust SBI 2,800 73,780 Reading International Class A (a) 12,100 46,585 Trizec Properties Inc. 5,900 59,885 --------------- --------------- 430,537 --------------- Restaurants - 1.0% McDonald's Corp. 5,900 106,849 --------------- Services- Data Processing - 4.2% Automatic Data Processing Inc 5,000 212,650 First Data Corp. 3,300 115,302 Total System Services Inc. 7,500 101,775 --------------- --------------- 429,727 --------------- Soft Drinks - 1.9% Coca-Cola Co. 2,600 120,848 Panamerican Beverages Inc. Class A 9,300 79,050 --------------- --------------- 199,898 --------------- Specialty Chemicals - 2.9% PPG Industries, Inc. 4,100 192,823 Valspar Corp. 2,600 108,602 --------------- --------------- 301,425 --------------- Systems Software & Computer Hardware - 1.5% Microsoft Corp. (a) 1,800 96,246 Sun Microsystems, Inc. (a) 19,500 57,740 --------------- --------------- 153,986 ---------------
Marathon Value Fund Schedule of Investments October 31, 2002 Common Stocks - 79.5%-continued Shares Value Telephone - 0.6% BellSouth Corp. 2,200 57,530 --------------- TOTAL COMMON STOCKS (Cost $9,004,002) 8,172,972 --------------- Corporate Bonds - 3.8% Allegiance Telecom Inc., Senior Notes 12.875% 5/15/2008 125,000 24,375 Avatar Holdings Inc, Subordinated Convertible Notes 7.00% 4/1/2005 30,000 28,200 Dollar General Corp. Notes 8.625% 6/15/2010 250,000 254,330 Unifi Inc. Notes 6.50% 2/1/2008 100,000 83,412 --------------- TOTAL CORPORATE BONDS (Cost $460,996) 390,317 --------------- U.S. Treasury & Agency Obligations - 9.8% U. S. Treasury Note 2.125% 10/31/2004 1,000,000 1,009,141 --------------- TOTAL U.S. TREASURY & AGENCY OBLIGATIONS (Cost $999,710) 1,009,141 --------------- Commercial Paper - 4.3% Sears Roebuck 1.65% 11/1/2002 450,000 450,000 --------------- TOTAL COMMERCIAL PAPER (Cost $450,000) 450,000 --------------- Money Market Securities - 2.1% First American Treasury Obligation Fund, 1.25%, (Cost $216,213) (b) 216,213 216,213 --------------- TOTAL INVESTMENTS (Cost $11,130,921) - 99.5% $ 10,238,643 --------------- Other assets less liabilities - 0.5% 48,223 --------------- TOTAL NET ASSETS - 100.0% $ 10,286,866 ===============
(a) Non-income producing. (b) Variable rate security; the coupon rate shown represents the rate at October 31, 2002. (c) American Depositary Receipt. Marathon Value Fund Statement of Assets and Liabilities 31-Oct-02 Assets Investments in securities, at value (cost $11,130,921) $ 10,238,643 Interest receivable 17,580 Dividends receivable 5,198 Receivable for investments sold 66,232 Other receivables 242 ---------------- Total assets 10,327,895 ---------------- Liabilities Payable for investments purchased 26,340 Accrued advisory fees 11,478 Other payables and accrued expenses 3,211 ---------------- Total liabilities 41,029 ---------------- Net Assets $ 10,286,866 ================ Net Assets consist of: Paid in capital 11,263,026 Accumulated undistributed net investment income (loss) 78,406 Accumulated net realized gain (loss) on investment transactions (162,288) Net unrealized appreciation (depreciation) on investments (892,278) ---------------- Net Assets, for 1,065,601 shares $ 10,286,866 ================ Net Asset Value Offering price and redemption price per share ($10,286,866 / 1,065,601) $ 9.65 ================
Marathon Value Fund Statement of Operations Year ended October 31, 2002 Investment Income Dividend income $ 124,140 Interest income 97,691 -------------- Total Income 221,831 -------------- Expenses Investment advisor fee 116,276 Trustee expenses 2,461 -------------- Total Expenses 118,737 -------------- -------------- Net Investment Income (Loss) 103,094 -------------- Realized & Unrealized Gain (Loss) Net realized gain (loss) on investment securities (53,443) Change in net unrealized appreciation (depreciation) on investment securities (1,028,596) -------------- -------------- Net realized and unrealized gain (loss) on investment securities (1,082,039) -------------- -------------- Net increase (decrease) in net assets resulting from operations $ (978,945) ==============
Marathon Value Fund Statement of Changes In Net Assets Year ended Year ended Increase (Decrease) in Net Assets Oct. 31, 2002 Oct. 31, 2001 ----------------- ---------------- Operations Net investment income (loss) $ 103,094 $ 79,584 Net realized gain (loss) on investment securities (53,443) 61,124 Change in net unrealized appreciation (depreciation) (1,028,596) (39,582) ----------------- ---------------- ----------------- ---------------- Net increase (decrease) in net assets resulting from operations (978,945) 101,126 ----------------- ---------------- Distributions From net investment income (88,490) (35,340) From net realized gain - - ----------------- ---------------- ----------------- ---------------- Total distributions (88,490) (35,340) ----------------- ---------------- Capital Share Transactions Proceeds from shares sold 4,166,003 3,431,820 Reinvestment of distributions 82,200 33,310 Amount paid for shares repurchased (188,085) (18,504) ----------------- ---------------- Net increase (decrease) in net assets resulting from share transactions 4,060,118 3,446,626 ----------------- ---------------- ----------------- ---------------- Total Increase (Decrease) in Net Assets 2,992,683 3,512,412 ----------------- ---------------- Net Assets Beginning of period 7,294,183 3,781,771 ----------------- ---------------- End of period [including accumulated undistributed net investment income (loss) of $78,406 and $63,802, respectively] $ 10,286,866 $ 7,294,183 ================= ================ Capital Share Transactions Shares sold 389,958 320,512 Shares issued in reinvestment of distributions 7,632 3,104 Shares repurchased (18,107) (1,749) ----------------- ---------------- Net increase (decrease) from capital transactions 379,483 321,867 ================= ================
Marathon Value Fund Financial Highlights Year ended Year ended Year ended Year ended Period ended Oct. 31, 2002 Oct. 31, 2001 Oct. 31, 2000 Oct. 31, 1999 Oct. 31, 1998 (a) ---------------- ---------------- --------------- ---------------- ------------------- Selected Per Share Data Net asset value, beginning of period $ 10.63 $ 10.38 $ 9.23 $ 8.48 $ 10.00 ---------------- ---------------- --------------- ---------------- ------------------- Income from investment operations Net investment income (loss) 0.12 0.16 0.08 (0.01) 0.02 Net realized and unrealized gain (loss) (0.98) 0.18 1.07 0.78 (1.54) ---------------- ---------------- --------------- ---------------- ------------------- ---------------- ---------------- --------------- ---------------- ------------------- Total from investment operations (0.86) 0.34 1.15 0.77 (1.52) ---------------- ---------------- --------------- ---------------- ------------------- Less Distributions to shareholders: From net investment income (0.12) (0.09) 0.00 (0.02) 0.00 From net realized gain 0.00 0.00 0.00 0.00 0.00 ---------------- ---------------- --------------- ---------------- ------------------- ---------------- ---------------- --------------- ---------------- ------------------- Total distributions (0.12) (0.09) 0.00 (0.02) 0.00 ---------------- ---------------- --------------- ---------------- ------------------- Net asset value, end of period $ 9.65 $ 10.63 $ 10.38 $ 9.23 $ 8.48 ================ ================ =============== ================ =================== Total Return (8.21)% 3.24% 12.46% (d) 9.04% (15.20)(b) Ratios and Supplemental Data Net assets, end of period (000) $ 10,287 $ 7,294 $ 3,782 $ 4,116 $ 3,259 Ratio of expenses to average net assets 1.28% 1.28% 1.42% (c) 1.48% 1.47% (e) Ratio of expenses to average net assets before waiver & reimbursement 1.28% 1.29% 1.49% 1.51% 1.50% (e) Ratio of net investment income to average net assets 1.11% 1.45% 0.85% (0.07)% 0.36% (e) Ratio of net investment income to average net assets before waiver & reimbursement 1.11% 1.45% 0.79% (0.11)% 0.33% (e) Portfolio turnover rate 44.44% 60.79% 207.02% 140.37% 61.04% (e)
(a) March 12, 1998 (commencement of operations) to October 31, 1998. (b) For periods of less than a full year, the total return is not annualized. (c) The rate for the fiscal year ended October 31, 2000 is higher than the rate in the current prospectus due to activity by the predecessor advisor. The predecessor advisor charged higher fees. (d) Effective March 28, 2000 the Fund obtained a new advisor. The total return from March 28, 2000 (date of change in advisor) through October 31, 2000 was 11.37%. (e) Annualized. Marathon Value Portfolio Notes To Financial Statements October 31, 2002 NOTE 1. ORGANIZATION Marathon Value Portfolio (the "Fund") was organized as a series of AmeriPrime Funds (the "Trust") on December 29, 1997 and commenced operations on March 12, 1998. The Trust is 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 of separate series 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 capital appreciation. 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 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 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 Advisor 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 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 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 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 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. Marathon Value Portfolio Notes To Financial Statements October 31, 2002 NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued Foreign currency translation - The books and records of the Fund are maintained in United States (U.S.) dollars. Foreign currencies, investments and other assets and liabilities are translated, as applicable, into U.S. dollars at the exchange rates prevailing at the end of each business day. Purchases and sales of investment securities, income and expenses are translated at the exchange rate prevailing on the respective dates of such transactions. Unrealized gains and losses which result from changes in foreign exchange rates and/or changes in market prices of securities, have been included in net unrealized appreciation/depreciation on investments. Other - The Fund follows industry practice and records security transactions on the trade date. The specific identification method is used for determining gains or losses for financial statements and income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Discounts and premiums on securities purchased are amortized over the life of the respective securities. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund Advisor is Spectrum Advisory Services, Inc. (the "Advisor"). Marc S. Heilweil, President 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 and pays all 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 the non-interested person Trustees, Rule 12b-1 distribution expenses, 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 October 31, 2002, the Advisor earned a fee of $116,276 from the Fund. The Advisor has contractually agreed to reimburse the Fund for the fees and expenses of the non-interested person Trustees, but only to the extent necessary to maintain the Fund's total annual operating expense ratio at 1.28% of average daily net assets through February 28, 2006. For the year ended October 31, 2002, the advisor has not reimbursed expenses. The Fund retains Unified Fund Services, Inc. ("Unified"), a wholly owned subsidiary of Unified Financial Services, 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. A Trustee of the Trust is a member of management of Unified, and the officers of the Trust are a director and officer, respectively, of Unified. The Fund retains Unified Financial Securities, Inc., a wholly owned subsidiary of Unified Financial Services, Inc., to act as the principal distributor of the Fund's shares. There were no payments made to either distributor during the fiscal year ended October 31, 2002. Kenneth D. Trumpfheller, a Trustee of the Trust, is a registered principal of, and may be deemed to be an affiliate of, the Distributor. Timothy Ashburn and Thomas Napurano are a director and officer, respectively, of the Distributor and the Distributor's parent company, and may be deemed to be affiliates of the Distributor. Marathon Value Portfolio Notes To Financial Statements October 31, 2002 NOTE 4. INVESTMENTS For the fiscal year ended October 31, 2002, purchases and sales of investment securities, other than short-term investments, aggregated $8,256,596 and $3,515,142, respectively. As of October 31, 2002, the unrealized appreciation for all securities totaled $673,449 and the unrealized depreciation for all securities totaled $1,586,652 for a net unrealized depreciation of $913,203. The aggregate cost of securities for federal income tax purposes at October 31, 2002 was $11,151,846. The difference between book cost and tax cost represents wash sales in the amount of $20,925. 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 beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of October 31, 2002, Charles Schwab & Co. held an omnibus account for the benefit of others amounting to more than 65% of the Fund. NOTE 7. RISKS RELATING TO FOREIGN SECURITY INVESTMENTS Securities in which the Fund invest may be denominated or quoted in currencies other than the U.S. Dollar. Changes in foreign currency exchange rates may therefore affect the value of the Fund's portfolio. Foreign investments involve special risks not applicable to investments in securities of U.S. issuers. Such securities risks include: imposition of exchange controls or currency devaluations; less extensive regulation of foreign brokers, securities markets and issuers; political, economic or social instability; less publicly available information and less liquidity in the market for such securities; different accounting standards and reporting obligations; foreign economies differ from the U.S. economy (favorably or unfavorably) in areas such as gross domestic product, rates of inflation, unemployment, currency depreciation and balance of payments positions; possibility of expropriation (the taking of property or amending of property rights by a foreign government) or foreign ownership limitations; and excessive or confiscatory taxation. NOTE 8. CAPITAL LOSS CARRYFORWARDS At October 31, 2002, the fund had available for federal tax purposes an unused capital loss carryforward of $87,920; $48,312 expires in 2006 and $39,608 expires in 2007. Capital loss carryforwards are available to offset future realized capital gains. To the extent that these carryforwards are used to offset future capital gains, it is probable that the amount, which is offset, will not be distributed to shareholders. Marathon Value Portfolio Notes To Financial Statements October 31, 2002 NOTE 9. DISTRIBUTION TO SHAREHOLDERS On December 12, 2001 a distribution of $0.12 was declared. The dividend was paid on December 13, 2001 to shareholders of record on December 12, 2001. The tax character of distributions paid during the fiscal years 2002 and 2001 were as follows: Distributions paid from: 2002 2001 ----------------------------- Ordinary Income $ 88,490 $ 35,340 Short-Term Capital Gain 0 0 Long-Term Capital Gain 0 0 ------------- ------------ $ 88,490 $ 35,340 ============= ============ As of October 31, 2002, the components of distributable earnings/(accumulated losses) on a tax basis were as follows: Undistributed ordinary income/(accumulated losses) $ 78,406 Undistributed long-term capital gain/(accumulated losses) (87,920) Unrealized appreciation/(depreciation) (966,646) ------------- $(976,160) ============= The difference between book basis and tax-basis unrealized depreciation is attributable to the tax deferral of losses on wash sales and post-October losses. NOTE 10. ELECTION OF TRUSTEES - (Unaudited) At a special meeting of the shareholders held on May 29, 2002, a vote was held to elect members to serve on the Board of Trustees. The vote tally for each Trustee is as follows: For Withheld Total Gary Hippenstiel 10,516,210.432 648,472.896 11,164,683.328 Mark Muller 10,856,443.432 308,239.896 11,164,683.328 Ken Trumpfheller 10,493,506.432 671,176.896 11,164,683.328 Richard Wright 10,858,138.432 306,544.896 11,164,683.328 The following table provides information regarding each Trustee who is not an "interested person" of the Trust, as defined in the Investment Company Act of 1940. Number of Portfolios Position(s) Held Length of in Fund Complex1 Name, Age and Address with Trust Time Served Overseen by Trustee Gary E. Hippenstiel Trustee Trustee since 1995 29 600 Jefferson Street Suite 350 Houston, TX 77002 Year of Birth: 1947
Principal Occupations During Past 5 Years Other Directorships Held by Trustee Director, Vice President and Chief Investment Officer of Legacy None Trust Company since 1992.
Number of Portfolios Position(s) Held Length of in Fund Complex1 Name, Age and Address with Trust Time Served Overseen by Trustee Mark W. Muller Trustee Trustee since 2002 29 5016 Cedar River Tr. Ft. Worth, TX 76137 Year of Birth: 1964
Principal Occupations During Past 5 Years Other Directorships Held by Trustee Trustee of AmeriPrime Advisors Trust since 1999. President of None JAMAR Resources, Inc., a manufacturers representative firm, September 2001 to present. Account Manager for SCI, Inc., a custom manufacturer, from April 2002 to September 2001. Account Manager for Clarion Technologies, a manufacturer of automotive, heavy truck, and consumer goods, from 1996 to April 2000.
Number of Portfolios Position(s) Held Length of in Fund Complex1 Name, Age and Address with Trust Time Served Overseen by Trustee Richard J. Wright, Jr. Trustee Trustee since 2002 29 13532 N. Central Expressway MS 3800 Dallas, TX 75243 Year of Birth: 1962
Principal Occupations During Past 5 Years Other Directorships Held by Trustee Trustee of AmeriPrime Advisors Trust since 1999. Various None positions with Texas Instruments, a technology company, since 1985, including the following: Program Manager for Semi- Conductor Business Opportunity Management System, 1998 to present; Development Manager for we-based interface, 1999 to present; Systems Manager for Semi-Conductor Business Opportunity Management System, 1997 to 1998; Development Manager for Acquisition Manager, 1996-1997; Operations Manager for Procurement Systems, 1994-1997.
The following table provides information regarding each Trustee who is an "interested person" of the Trust, as defined in the Investment Company Act of 1940, and each officer of the Trust. Number of Portfolios Position(s) In Length of in Fund Complex1 Name, Age and Address Fund Complex Time Served Overseen by Trustee Kenneth D. Trumpfheller2 Trustee Since 1995 29 1725 E. Southlake Blvd. Suite 200 Southlake, Texas 76092 Year of Birth: 1958
Principal Occupations During Past 5 Years Other Directorships Held by Trustee President and Managing Director of Unified Fund Services, Inc., None the Fund's transfer agent, fund accountant and administrator, since October 2000. President, Treasurer, and Secretary of Ameriprime Financial Services, Inc., a fund administrator, (which merged with Unified Fund Services, Inc.) from 1994 through October 2000. President, Treasurer and Secretary of Ameriprime Financial Securities, Inc., the Trust's distributor through December 2000, from 1994 through December 2000.
Number of Portfolios Position(s) Held Length of in Fund Complex1 Name, Age and Address with Trust Time Served Overseen by Trustee Timothy Ashburn3 President and Secretary Since October 2002 N/A 2424 Harrodsburg Road Lexington, KY 40503 Year of Birth: 1950
Principal Occupations During Past 5 Years Other Directorships Held by Trustee Chairman of Unified Financial Services, Inc. since 1989 and N/A Chief Executive Officer from 1989 to 1992 and 1994 to April 2002; President of Unified Financial Services from November 1997 to April 2000.
Number of Portfolios Position(s) In Length of in Fund Complex1 Name, Age and Address Fund Complex Time Served Overseen by Trustee Thomas G. Napurano Treasurer and Chief Since October 2002 N/A 2424 Harrodsburg Road Finacial Officer Lexington, KY 40503 Year of Birth: 1941
Principal Occupations During Past 5 Years Other Directorships Held by Trustee Chief Financial Officer and Executive Vice President of Unified N/A Finacial Services, Inc., the parent company of the Trust's administrator and principal underwriter; member the board of directors of Unified Financial Services, Inc. from 1989 to March 2002.
1 The term "fund complex" refers to the AmeriPrime Funds and the Ameriprime Advisors Trust. 2 Mr. Trumpfheller may be deemed to be an "interested person" of the Trust because he is a registered principal of the Trust's distributor 3 Mr.Ashburn is an "interested person" of the Trust because he is an officer of the Trust. In addition, he may be deemed to be an "interested person" of the Trust because he is Chairman of Unified Financial Services, Inc., the parent of the principal underwriter for the Funds. INDEPENDENT AUDITOR'S REPORT To The Shareholders and Board of Trustees Marathon Value Portfolio (a series of AmeriPrime Funds) We have audited the accompanying statement of assets and liabilities of Marathon Value Portfolio, including the schedule of portfolio investments as of October 31, 2002, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended and for the period of March 12, 1998 (commencement of operation) through October 31, 1998. 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. 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 securities owned as of October 31, 2002, 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 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 the Marathon Value Portfolio as of October 31, 2002, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, and for the period of March 12, 1998 (commencement of operation) through October 31, 1998, in conformity with accounting principles generally accepted in the United States of America. McCurdy & Associates CPA's, Inc. Westlake, Ohio November 14, 2002 Dear Shareholder: In review of the past twelve months ending October 31, 2002, the stock market continues to be in a malaise. The equity market began its downtrend in March of 2000 and just cannot seem to find momentum to restart the bull market. At times in the last twelve months we have seen some market strength but the market has not been able to sustain any positive move forward. The economy seems to be only muddling along and everyone is looking forward to a fresh start in 2003. Our investment decisions continue to be based on strong fundamentals. We have spent time this year reviewing our holdings, updating the quality of our investment portfolio and looking for new market leaders. As gloomy as this letter may seem, we believe there is light at the end of the tunnel. The next twelve months will continue to see market volatility but, hopefully, in early 2003 we will begin to see some positive earnings announcements. We remain positive about the long term growth aspects of the stock market and we are currently taking a long term approach to investing. I constantly hear that patience is a virtue, but all of us have become used to positive results from the stock market and our patience is growing just a little thin. In these difficult market times, it is always good to harken back to the last 70 years and remember that we have seen many markets like what we have seen these last 30+ months. Keep in perspective that past performance is not an indication of future results and that the market has delivered on average a 10%+ market index annual return since 1929. Thank you for your continued support and we look forward to serving you in the future. Knox H. Fuqua For more complete information on the Fund, including charges and expenses, obtain a prospectus by calling 1-888-905-2283. The prospectus should be read carefully before investing. The Fund is distributed by Unified Financial Securities, Inc. Management Discussion & Analysis The AAM Equity Fund (the "Fund") ended its October fiscal year with a negative return of 11.49%. Investment Results - Fiscal Year Ended October 31, 2002 Comparative Investment Returns as of The S&P 500 Dow Jones Industrial 10/31/02A Fund Index Average 1 Year Ending -11.49% -15.11% -5.57% Since Inception 6/30/98 -14.12% -17.19% 1.06% Average Annual Since Inception -3.44% -4.25% .24%
AAM S&P DJ 6/30/98 10,000.00 10,000.00 10,000.00 10/31/98 9,430.00 9,739.10 9,650.96 10/31/99 11,008.58 12,241.50 12,248.75 10/31/00 11,590.33 12,986.08 10,716.06 10/31/01 9,752.95 9,753.89 10,701.96 10/31/02 8,588.26 8,280.52 10,105.91 The chart shows the value of a hypothetical initial investment of $10,000 in the Fund, the S&P 500 Index and the Dow Jones Industrial Average on June 30, 1998 (commencement of operations) through October 31, 2002. AThe S&P 500 Index and the Dow Jones Industrial Average Index are widely recognized unmanaged indices of equity prices and are representative of a broader market and range of securities than is found in the Fund portfolio. Individuals cannot invest directly in these Indices. Performance figures reflect the change in value of equity in the Indices. The Index returns do not reflect expenses, which have been deducted from the Fund's return. THE FUND'S RETURN REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment returns and principal values will fluctuate so that your shares, when redeemed, may be worth more or less than their original purchase price. For more information on the Fund, please call 1-888-905-2283 to request a prospectus. Investing in the Fund involves certain risks that are discussed in the Fund's prospectus. Please read the prospectus carefully before you invest or send money. AAM Equity Fund Schedule of Investments October 31, 2002 Common Stocks - 88.5% Shares Value Aircraft - 1.0% Northrop Grumman Corp. 750 $ 77,348 ---------------- Beverages - 2.1% Coca-Cola Co. 3,500 162,680 ---------------- Biological Products (No Diagnostic Substances) - 2.1% Amgen, Inc. (a) 3,500 162,960 ---------------- Cable & Other Pay Television Services - 1.6% Liberty Media Corp. Class A (a) 15,000 124,050 ---------------- Car Dealers - 0.5% CarMax, Inc. (a) 2,511 41,155 ---------------- Chemicals & Allied Products - 1.6% Dow Chemical Co. 5,000 129,950 ---------------- Computer Communication Equipment - 1.4% Cisco Systems, Inc. (a) 10,000 111,800 ---------------- Computer Storage Devices - 0.6% EMC Corp. (a) 10,000 51,100 ---------------- Computers & Office Equipment - 3.2% Hewlett-Packard Co. 6,000 94,800 International Business Machines Corp. 2,000 157,880 ---------------- ---------------- 252,680 ---------------- Converted Paper & Paperboard Products (No Containers/Boxes) - 2.4% Avery Dennison Corp. 3,000 186,720 ---------------- Electric Services - 1.6% Duke Energy Corp. 6,000 122,940 ---------------- Electronic & Other Electrical Equipment (No Computer Equipment) - 1.6% General Electric Co. 5,000 126,250 ---------------- Electronic Instruments - 2.5% Emerson Electric Co. 4,000 192,720 ---------------- Finance Services - 2.3% American Express Co. 5,000 181,850 ---------------- Fire, Marine, Casualty Insurance - 5.9% American International Group, Inc. 3,000 187,650 Berkshire Hathaway, Inc. - Class B (a) 50 123,000 Markel Corp. (a) 750 151,868 ---------------- ---------------- 462,518 ----------------
AAM Equity Fund Schedule of Investments October 31, 2002 Common Stocks - continued Shares Value Hospital & Medical Service Plans - 2.0% Anthem, Inc. (a) 2,500 157,500 ---------------- Life Insurance - 2.0% Jefferson-Pilot Corp. 4,000 160,600 ---------------- Malt Beverages - 2.3% Anheuser-Busch Cos., Inc. 3,500 184,660 ---------------- National Commercial Banks - 9.0% Bank of America Corp. 2,000 139,600 BB&T Corp. 3,500 126,875 Citigroup, Inc. 4,000 147,800 FleetBoston Financials Corp. 6,000 140,340 SunTrust Banks, Inc. 2,500 152,100 ---------------- ---------------- 706,715 ---------------- Oil, Gas, Field Services - 2.0% Schlumberger Ltd. 4,000 160,440 ---------------- Personal Credit Institutions - 1.6% Capital One Financial Corp. 4,000 121,880 ---------------- Petroleum Refining - 9.2% BP PLC. (b) 3,500 134,575 ChevronTexaco Corp. 2,500 169,075 ConocoPhillips 2,338 113,393 Exxon Mobil Corp. 4,000 134,640 Murphy Oil Corp. 2,000 167,660 ---------------- ---------------- 719,343 ---------------- Pharmaceutical Preparations - 8.8% Johnson & Johnson 3,500 205,625 Merck & Co., Inc. 3,500 189,840 Pfizer, Inc. 5,000 158,850 Wyeth 4,000 134,000 ---------------- ---------------- 688,315 ---------------- Primary Production of Aluminum - 2.0% Alcoa, Inc. 7,000 154,420 ---------------- Radio Telephone Communications - 1.8% Dominion Resouces, Inc. 3,000 144,000 ---------------- Retail - Drug Stores & Proprietary Stores - 1.5% Walgreen Co. 3,500 118,125 ----------------
AAM Equity Fund Schedule of Investments October 31, 2002 Common Stocks - continued Shares Value Retail - Radio TV & Consumer Electronics Stores - 1.0% Circuit City Stores, Inc. 8,000 79,280 ---------------- Rolling Drawing & Extruding of Nonferrous Metals - 1.3% Tredegar Corp. 8,000 103,200 ---------------- Semiconductors & Related Devices - 2.2% Intel Corp. 10,000 173,000 ---------------- Services - Miscellaneous Amusement & Recreation - 1.7% Walt Disney Co. 8,000 133,600 ---------------- Services - Motion Picture & Video Tape Production - 1.9% Fox Entertainment Group, Inc. - Class A (a) 6,000 146,460 ---------------- Services - Prepackaged Software - 2.0% Microsoft Corp. (a) 3,000 160,410 ---------------- Ship & Boat Building & Repairing - 2.0% General Dynamics Corp. 2,000 158,260 ---------------- Telephone Communications (No Radiotelephone) - 2.0% SBC Communications, Inc. 6,000 153,960 ---------------- Wholesale - Groceries & Related Products - 1.8% Sysco Corp. 4,500 142,560 ---------------- TOTAL COMMON STOCKS (Cost $7,754,929) 6,953,449 ---------------- Certificates of Deposits - 9.5% LaSalle Bank, 0%, 6/25/12 (c) 750,000 ---------------- TOTAL CERTIFICATES OF DEPOSITS (Cost $750,000) 750,000 ---------------- TOTAL INVESTMENTS (Cost $8,504,929) - 98.0% $ 7,703,449 ---------------- Cash and other assets less liabilities - 2.0% 153,274 ---------------- TOTAL NET ASSETS - 100.0% $ 7,856,723 ================
(a) Non-income producing. (b) American Depositary Receipt. (c) Interest, if any, will be determined, earned, credited and paid on maturity date based upon a calculation based on the Dow Jones Industrial Average. After one year, this certificate of deposit may be redeemed at the Fund's option every quarter. Redemption prices will be established by the bank and may be more or less than the orginal investment value. See accompanying notes which are an integral part of the financial statements. AAM Equity Fund Statement of Assets and Liabilities October 31, 2002 Assets Investments in securities, at value (cost $8,504,929) $ 7,703,449 Interest receivable 351 Dividends receivable 4,670 Receivable for fund shares sold 200,000 Prepaid expenses 4,077 Receivable from investment advisor 2,540 ---------------- Total assets 7,915,087 ---------------- Liabilities Payable to custodian 57,269 Other payables and accrued expenses 1,095 ---------------- Total liabilities 58,364 ---------------- Net Assets $ 7,856,723 ================ Net Assets consist of: Paid in capital 9,190,484 Accumulated undistributed net investment income 57,319 Accumulated net realized gain (loss) on investments (589,600) Net unrealized appreciation (depreciation) on investments (801,480) ---------------- Net Assets, for 926,610 shares $ 7,856,723 ================ Net Asset Value, Offering price and redemption price per share ($7,856,723 / 926,610) $ 8.48 ================
See accompanying notes which are an integral part of the financial statements. AAM Equity Fund Statement of Operations Year ended October 31, 2002 Investment Income Dividend income $ 138,282 Interest income 4,127 -------------- Total Income 142,409 -------------- Expenses Investment advisor fee 76,031 Interest expense 3,336 Organizational expenses 6,203 Trustee expenses 2,295 -------------- Total Expenses 87,865 Reimbursed expenses (8,498) -------------- -------------- Total operating expenses 79,367 -------------- -------------- Net Investment Income (Loss) 63,042 -------------- Realized & Unrealized Gain (Loss) Net realized gain (loss) on investment securities (382,910) Change in net unrealized appreciation (depreciation) on investment securities (609,650) -------------- -------------- Net realized and unrealized gain (loss) on investment securities (992,560) -------------- -------------- Net increase (decrease) in net assets resulting from operations $ (929,518) ==============
See accompanying notes which are an integral part of the financial statements. AAM Equity Fund Statement of Changes In Net Assets Year ended Year ended Increase (Decrease) in Net Assets Oct. 31, 2002 Oct. 31, 2001 ---------------- --------------- Operations Net investment income (loss) $ 63,042 $ 24,613 Net realized gain (loss) on investment securities (382,910) (84,324) Change in net unrealized appreciation (depreciation) (609,650) (890,344) ---------------- --------------- ---------------- --------------- Net increase (decrease) in net assets resulting from operations (929,518) (950,055) ---------------- --------------- Distributions From net investment income (28,581) (11,870) From net realized gain - - ---------------- --------------- ---------------- --------------- Total distributions (28,581) (11,870) ---------------- --------------- Capital Share Transactions Proceeds from shares sold 9,478,469 1,884,619 Reinvestment of distributions 21,791 9,397 Amount paid for shares repurchased (6,056,366) (855,693) ---------------- --------------- Net increase (decrease) in net assets resulting from share transactions 3,443,894 1,038,323 ---------------- --------------- ---------------- --------------- Total Increase (Decrease) in Net Assets 2,485,795 76,398 ---------------- --------------- Net Assets Beginning of period 5,370,928 5,294,530 ---------------- --------------- End of period [including accumulated undistributed net investment income of $57,319 and $22,858, respectively] $ 7,856,723 $ 5,370,928 ================ =============== Capital Share Transactions Shares sold 1,005,727 177,186 Shares issued in reinvestment of distributions 2,138 829 Shares repurchased (639,167) (79,125) ---------------- --------------- Net increase (decrease) from capital transactions 368,698 98,890 ================ ===============
See accompanying notes which are an integral part of the financial statements. AAM Equity Fund Financial Highlights Year ended Year ended Year ended Year ended Period ended Oct. 31, 2002 Oct. 31, 2001 Oct. 31, 2000 Oct. 31, 1999 Oct. 31,1998 (a) -------------- -------------- -------------- --------------- ---------------- Selected Per Share Data Net asset value, beginning of period $ 9.63 $ 11.53 $ 10.99 $ 9.43 $ 10.00 -------------- -------------- -------------- --------------- ---------------- Income from investment operations Net investment income (loss) 0.09 0.05 0.03 0.05 0.03 Net realized and unrealized gain (loss) (1.19) (1.92) 0.55 1.53 (0.60) -------------- -------------- -------------- --------------- ---------------- -------------- -------------- -------------- --------------- ---------------- Total from investment operations (1.10) (1.87) 0.58 1.58 (0.57) -------------- -------------- -------------- --------------- ---------------- Less Distributions to shareholders: From net investment income (0.05) (0.03) (0.04) (0.02) 0.00 From net realized gain 0.00 0.00 0.00 0.00 0.00 -------------- -------------- -------------- --------------- ---------------- -------------- -------------- -------------- --------------- ---------------- Total distributions (0.05) (0.03) (0.04) (0.02) 0.00 -------------- -------------- -------------- --------------- ---------------- Net asset value, end of period $ 8.48 $ 9.63 $ 11.53 $ 10.99 $ 9.43 ============== ============== ============== =============== ================ Total Return (11.49)% (16.28)% 5.28% 16.74% (5.70)(b) Ratios and Supplemental Data Net assets, end of period (000) $ 7,857 $ 5,371 $ 5,295 $ 4,337 $ 2,852 Ratio of expenses to average net assets 1.20% 1.15% 1.15% 1.15% 1.14% (c) Ratio of expenses to average net assets before waiver & reimbursement 1.33% 1.30% 1.35% 1.35% 1.40% (c) Ratio of net investment income to average net assets 0.95% 0.46% 0.22% 0.43% 0.90% (c) Ratio of net investment income to average net assets before waiver & reimbursement 0.83% 0.30% 0.02% 0.23% 0.64% (c) Portfolio turnover rate 20.06% 21.63% 32.79% 27.34% 14.41% (c)
(a) June 30, 1998 (Commencement of operations) to October 31,1998. (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. AAM Equity Fund Notes to Financial Statements October 31, 2002 NOTE 1. ORGANIZATION AAM Equity Fund (the "Fund") was organized as a diversified series of the AmeriPrime Funds (the "Trust") on June 30, 1998 and commenced operations on June 30, 1998. The Trust is 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 of separate series 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 capital appreciation. The Fund's advisor is Appalachian Asset Management, Inc., (the "Advisor"). 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 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 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. 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. 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 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 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 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. AAM Equity Fund Notes to Financial Statements October 31, 2002 - continued NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES In February 2002, the Advisor announced that it would be acquired by KI&T Holdings, Inc. ("KI&T") and Argent Financial Group, Inc. ("Argent"). Pursuant to the Investment Company Act of 1940, as amended (the "Investment Company Act"), a transaction that results in a change of control of an investment adviser may be deemed an "assignment." The Investment Company Act further provides that a management agreement will automatically terminate in the event of an assignment. In anticipation of the transaction described above and resulting termination of the old management agreement, a special meeting of shareholders was held on April 5, 2002. The shareholders approved a new management agreement that is substantially identical in all material respects to the old management agreement. The new agreement was effective May 23, 2002, the date of change of control. 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 at the annual rate of 1.15% of the average value of its daily net assets. 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, October 31, 2002 the Advisor earned a fee of $76,031 from the Fund. The Advisor has contractually agreed to reimburse the Fund for the fees and expenses of the non-interested person Trustees incurred by the Fund through February 28, 2003, but only to the extent necessary to maintain the Fund's total annual operating expenses at 1.15% of average daily net assets. For the fiscal year ended October 31, 2001, the Advisor reimbursed Trustees' fees and organizational expenses of $8,498. The Fund retains Unified Fund Services, Inc. ("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 Agreement. A Trustee of the Trust is a member of management of Unified, and the officers of the Trust are a director and officer, respectively, of Unified. The Fund retains Unified Financial Securities, Inc. to act as the principal distributor of the Fund's shares. There were no payments made to the distributor during the fiscal year ended October 31, 2002. Kenneth D. Trumpfheller, a Trustee of the Trust, is a registered principal of, and may be deemed to be an affiliate of, the Distributor. Timothy L. Ashburn and Thomas G. Napurano are a director and officer, respectively, of the Distributor and the Distributor's parent company, and may be deemed to be affiliates of the Distributor. NOTE 4. INVESTMENTS For the fiscal year ended October 31, 2002, purchases and sales of investment securities, other than short-term investments, aggregated $4,928,791 and $1,222,455, respectively. As of October 31, 2002, the unrealized appreciation for all securities totaled $336,772 and the unrealized depreciation for all securities totaled $1,521,162 for a net unrealized depreciation of $1,184,390. The aggregate cost of securities for federal income tax purposes as of October 31, 2002 was $8,887,839. 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. AAM Equity Fund Notes to Financial Statements October 31, 2002 - continued NOTE 6. RELATED PARTY TRANSACTIONS The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the Fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of October 31, 2002, RSBCO held for the benefit of others in aggregate more than 89% of the Fund. NOTE 7. ORGANIZATION COSTS Organization costs are being amortized on a straight-line basis over a five-year period that will end in June 2003. As of October 31, 2002, the unamortized balance is $4,077. NOTE 8. CAPITAL LOSS CARRYFORWARDS As of October 31, 2002, loss carryforwards totaled $206,690: $117,061 expiring in 2009, $74,070 expiring 2007, and $15,559 expiring in 2006. To the extent that these carryforwards are used to offset future capital gains, it is probable that the amount which is offset will not be distributed to shareholders. The Fund has elected to defer post-October losses of $382,910. NOTE 9. DISTRIBUTION TO SHAREHOLDERS On December 12, 2001, a distribution of $0.052 was declared. The dividend was paid on December 13, 2001 to shareholders of record on December 12, 2001. The tax character of distributions paid during the fiscal years 2002 and 2001 were as follows: Distributions paid from: 2002 2001 ------------ ------------- Ordinary Income $ 28,581 $ 11,870 Short-Term Capital Gain 0 0 Long-Term Capital Gain 0 0 ------------ ------------- $ 28,581 $ 11,870 ============ ============= As of October 31, 2002, the components of distributable earnings/(accumulated losses) on a tax basis were as follows: Undistributed ordinary income $ 57,319 Undistributed long-term capital gains/(accumulated losses) (206,690) Undistributed appreciation/(depreciation) (1,184,390) ---------------- $ (1,333,761) ================ The difference between book basis and tax basis unrealized depreciation is attributable to the tax deferral of losses on post-October losses. AAM Equity Fund Notes to Financial Statements October 31, 2002 - continued NOTE 10. ELECTION OF TRUSTEES- (Unaudited) At a special meeting of the shareholders held on May 29, 2002, a vote was held to elect members to serve on the Board of Trustees. The vote tally for each Trustee is as follows: For Withheld Total Gary Hippenstiel 10,516,210.432 648,472.896 11,164,683.328 Mark Muller 10,856,443.432 308,239.896 11,164,683.328 Ken Trumpfheller 10,493,506.432 671,176.896 11,164,683.328 Richard Wright 10,858,138.432 306,544.896 11,164,683.328 NOTE 11. SHAREHOLDER VOTE FOR NEW MANAGEMENT AGREEMENT (Unaudited) The new management agreement with the Advisor, which was approved by shareholders at a meeting held on April 5, 2002, was effective on May 23, 2002. The Advisor is now 50% owned by KI&T and 50% owned by Argent. Votes on Proposal 1: Approval of a new Management Agreement between the Trust and Appalachian Asset Management, Inc. Shares for Proposal 1 - 410,076.908 Shares against Proposal 1 - 0 Shares abstain Proposal 1 - 0 The following table provides information regarding each Trustee who is not an "interested person" of the Trust, as defined in the Investment Company Act of 1940. Number of Portfolios Position(s) Held Length of in Fund Complex1 Name, Age and Address with Trust Time Served Overseen by Trustee Gary E. Hippenstiel Trustee Trustee since 1995 29 600 Jefferson Street Suite 350 Houston, TX 77002 Year of Birth: 1947
Principal Occupations During Past 5 Years Other Directorships Held by Trustee Director, Vice President and Chief Investment Officer of Legacy None Trust Company since 1992.
Number of Portfolios Position(s) Held Length of in Fund Complex1 Name, Age and Address with Trust Time Served Overseen by Trustee Mark W. Muller Trustee Trustee since 2002 29 5016 Cedar River Tr. Ft. Worth, TX 76137 Year of Birth: 1964
Principal Occupations During Past 5 Years Other Directorships Held by Trustee Trustee of AmeriPrime Advisors Trust since 1999. President of None JAMAR Resources, Inc., a manufacturers representative firm, September 2001 to present. Account Manager for SCI, Inc., a custom manufacturer, from April 2002 to September 2001. Account Manager for Clarion Technologies, a manufacturer of automotive, heavy truck, and consumer goods, from 1996 to April 2000.
Number of Portfolios Position(s) Held Length of in Fund Complex1 Name, Age and Address with Trust Time Served Overseen by Trustee Richard J. Wright, Jr. Trustee Trustee since 2002 29 13532 N. Central Expressway MS 3800 Dallas, TX 75243 Year of Birth: 1962
Principal Occupations During Past 5 Years Other Directorships Held by Trustee Trustee of AmeriPrime Advisors Trust since 1999. Various None positions with Texas Instruments, a technology company, since 1985, including the following: Program Manager for Semi- Conductor Business Opportunity Management System, 1998 to present; Development Manager for we-based interface, 1999 to present; Systems Manager for Semi-Conductor Business Opportunity Management System, 1997 to 1998; Development Manager for Acquisition Manager, 1996-1997; Operations Manager for Procurement Systems, 1994-1997.
The following table provides information regarding each Trustee who is an "interested person" of the Trust, as defined in the Investment Company Act of 1940, and each officer of the Trust. Number of Portfolios Position(s) In Length of in Fund Complex1 Name, Age and Address Fund Complex Time Served Overseen by Trustee Kenneth D. Trumpfheller2 Trustee Since 1995 29 1725 E. Southlake Blvd. Suite 200 Southlake, Texas 76092 Year of Birth: 1958
Principal Occupations During Past 5 Years Other Directorships Held by Trustee President and Managing Director of Unified Fund Services, Inc., None the Fund's transfer agent, fund accountant and administrator, since October 2000. President, Treasurer, and Secretary of Ameriprime Financial Services, Inc., a fund administrator, (which merged with Unified Fund Services, Inc.) from 1994 through October 2000. President, Treasurer and Secretary of Ameriprime Financial Securities, Inc., the Trust's distributor through December 2000, from 1994 through December 2000.
Number of Portfolios Position(s) Held Length of in Fund Complex1 Name, Age and Address with Trust Time Served Overseen by Trustee Timothy Ashburn3 President and Secretary Since October 2002 N/A 2424 Harrodsburg Road Lexington, KY 40503 Year of Birth: 1950
Principal Occupations During Past 5 Years Other Directorships Held by Trustee Chairman of Unified Financial Services, Inc. since 1989 and N/A Chief Executive Officer from 1989 to 1992 and 1994 to April 2002; President of Unified Financial Services from November 1997 to April 2000.
Number of Portfolios Position(s) In Length of in Fund Complex1 Name, Age and Address Fund Complex Time Served Overseen by Trustee Thomas G. Napurano Treasurer and Chief Since October 2002 N/A 2424 Harrodsburg Road Financial Officer Lexington, KY 40503 Year of Birth: 1941
Principal Occupations During Past 5 Years Other Directorships Held by Trustee Chief Financial Officer and Executive Vice President of Unified N/A Finacial Services, Inc., the parent company of the Trust's administrator and principal underwriter; member the board of directors of Unified Financial Services, Inc. from 1989 to March 2002.
1 The term "fund complex" refers to the AmeriPrime Funds and the Ameriprime Advisors Trust. 2 Mr. Trumpfheller may be deemed to be an "interested person" of the Trust because he is a registered principal of the Trust's distributor 3 Mr. Ashburn is an "interested person" of the Trust because he is an officer of the Trust. In addition, he may be deemed to be an "interested person" of the Trust because he is Chairman of Unified Financial Services, Inc., the parent of the principal underwriter for the Funds. INDEPENDENT AUDITOR'S REPORT To The Shareholders and Board of Trustees AAM Equity Fund We have audited the accompanying statement of assets and liabilities of the AAM Equity Fund, including the schedule of portfolio investments as of October 31, 2002, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended and for the period of June 30, 1998 (commencement of operation) through October 31, 1998. 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. 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 securities owned as of October 31, 2002, by correspondence with the custodian. 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 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 the AAM Equity Fund as of October 31, 2002, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, and for the period of June 30, 1998 (commencement of operations) through October 31, 1998, in conformity with accounting principles generally accepted in the United States of America. McCurdy & Associates CPA's, Inc. Westlake, Ohio November 14, 2002 -----END PRIVACY-ENHANCED MESSAGE-----