-----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, TY9gPqduZxFGMWfctkXCLQ6Ar1q02Y2zeqeDr2vjGzu8Y+2PN8kGi1wP8Ai4pxbU tgdHwL2UDJFNZgAUykirew== 0001035449-04-000416.txt : 20040908 0001035449-04-000416.hdr.sgml : 20040908 20040908165915 ACCESSION NUMBER: 0001035449-04-000416 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040908 DATE AS OF CHANGE: 20040908 EFFECTIVENESS DATE: 20040908 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-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-09096 FILM NUMBER: 041021157 BUSINESS ADDRESS: STREET 1: 431 NORTH PENNSYLVANIA STREET 2: STREET CITY: INDIANAPOLIS STATE: IN ZIP: 46204 BUSINESS PHONE: 317-917-7000 MAIL ADDRESS: STREET 1: 431 NORTH PENNSYLVANIA STREET 2: STREET CITY: INDIANAPOLIS STATE: IN ZIP: 46204 N-CSR 1 imsfinancials.txt AMERIPRIME FUNDS UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-09096 AmeriPrime Funds (Exact name of registrant as specified in charter) 431 N. Pennsylvania St. Indianapolis, IN 46204 (Address of principal executive offices) (Zip code) Lynn Wood Unified Fund Services, Inc. 431 N. Pennsylvania St. Indianapolis, IN 46204 (Name and address of agent for service) Registrant's telephone number, including area code: 317-917-7000 Date of fiscal year end: 06/30 Date of reporting period: 06/30/04 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. 3507. Item 1. Reports to Stockholders. [logo] IMS Capital Management, Inc. ---------------------------- Building Wealth Wisely IMS Capital Value Fund ANNUAL REPORT IMS Strateic Income Fund June 30, 2004 IMS Strategic Allocation Fund www.imscapital.com 8995 S.E. Otty Road, Portland, Oregon 97266 Registered Investment Advisors (503) 788-4200 since 1988 Letter to Shareholders Dear Fellow Shareholders: We are pleased to present the annual report for the IMS family of no load funds. This report covers the financial results and investment activity for IMS Capital Value Fund and IMS Strategic Allocation Fund for the 12 months ended June 30, 2004, and IMS Strategic Income Fund for the 10 months ended June 30, 2004. The Funds Continue to Grow The last calendar year saw the end of a remarkable rally in the stock market following three calendar years of negative returns. Our equity funds, the IMS Capital Value Fund and the IMS Strategic Allocation Fund, participated in this rally and continued to hold their own when the market began to consolidate in January. Since the beginning of 2004, IMS Capital Value Fund net assets have grown by $30 million or 50%, due to a combination of positive investment results and additional shareholder purchases. The Fund was featured in several prominent industry publications during the period, including the February 2, 2004 issue of Forbes, as well as BusinessWeek online, and the June issue of Money, which recognized the Fund as one of the ten best performing mid cap funds for the three years ended April 8, 2004 (#9 out of 1,079 funds, based on total return). The IMS Strategic Allocation Fund net assets have grown by $9 million or 80% since the beginning of 2004 as its unique strategy gained favor with investors seeking professional, active allocation of their assets. The IMS Strategic Income Fund net assets grew by $10 million or 24% during the period as more investors seeking higher yields invested in the Fund. We believe this Fund is well-positioned for higher interest rates in the coming fiscal year. The Backdrop for Performance Economically, the period was marked by escalating oil prices, conflict in Iraq, fears of rising rates and inflation concerns. The broad stock market, as measured by the S&P 500, returned 3.44% for the six months and 19.11% for the year ending June 30. Small stocks fared better with the Russell 2000 posting a return of 6.76% for the six months and 33.37% for the year. Although small and mid cap stocks clearly led the rally, which started in March 2003, they were the first to stumble as the market consolidated. However, we believe small and mid cap stocks will resume their leadership when the equity markets advance. In the meantime, the Federal Reserve Board raised rates a quarter point during its June 30th meeting. Long priced into the market, the 0.25% rate hike prompted the S&P 500 to jump the same day and bond yields actually declined, leading us to believe that short-term rates will reflect the bulk of the Fed hike, and long-term rates will remain stable to slightly higher in coming months. As we head into a presidential election, we believe that the market will improve as earnings estimates have been rising and we think there is more good news in store. We continue to manage the Funds for superior risk adjusted investment results and we are optimistic that long-term investors in the Funds will be rewarded. The following pages contain a detailed discussion about the activity in each fund over the last year. If you have any questions about the Funds or your account with us, please do not hesitate to call Shareholder Services at 1-800-934-5550. As always, we thank you for your continuing confidence and trust in IMS Capital Management. Sincerely, /s/ Carl Marker /s/ Arthur Nunes Carl W. Marker Arthur G. Nunes Portfolio Manager Portfolio Manager 1 Management's Discussion and Analysis IMS Capital Value Fund For the 12 months ended June 30, 2004, the IMS Capital Value Fund gained 31.46% compared to the Russell MidCap Value Index, which gained 30.81%. During the period, the Fund continued to maintain broad exposure to the major equity market sectors, and we worked diligently to put new cash flow to work in undervalued mid cap stocks showing signs of positive momentum. As part of our strategy during the period, we increased the Fund's health care position with the addition of LifePoint Hospitals. Established in 1999 as a spin-off of HCA - The Healthcare Company, LifePoint owns and operates general acute care hospitals located in growing non-urban areas. In most cases, the LifePoint facility is the only hospital in the community. In other additions to the Fund, we initiated a position in Equifax, as a combination financial services and information technology play. With a 100+ year history, Equifax enables and secures global commerce through information management and marketing services, serving customers across a wide range of industries including the financial services, retail, healthcare, telecommunications/utilities, brokerage, insurance and government industries. Equifax also helps consumers to manage and protect their financial health through credit scoring and reporting services. In other activity, we added to our financial services holdings with a new position in CheckFree. CheckFree is a leading provider of financial electronic commerce services and products and has relationships with financial institutions, Web portals and organizations that issue regular bills or statements, which give consumers the ability to receive and pay bills online. Existing positions that contributed to fund performance included CenturyTel in the telecommunications area, which underperformed early in the period, but was later upgraded by analysts in the second quarter and its price increased significantly as a result. Sectors contributing positively to the Fund during the period included energy (due to rising oil prices) and basic materials and capital goods, which benefited from strong manufacturing activity as the economy improved. Areas that caused the Fund to give back some of its gains included health care, where Watson Pharmaceuticals announced a management change and an earnings warning. The financial sector did not hold up well toward the end of the period, and a couple of our financial stocks missed their earnings projections, including E*Trade. Lastly, in the technology sector, our LSI Logic holding suffered after it warned of lower sales. Looking ahead, we believe that the stock market will slowly digest lingering uncertainties about Iraq, interest rates and the upcoming presidential election as it gains confidence about generally positive earnings reports. In this environment, we will work hard to find those undervalued mid cap stocks whose fundamentals are actively recovering. Thank you for your investment in IMS Capital Value Fund. /s/ Carl Marker Carl W. Marker Portfolio Manager 2 Investment Results Average Annual Total Returns (for periods ended June 30, 2004) Since Inception One Year Five Year (August 5, 1996) ------------ ------------ ---------------- IMS Capital Value Fund* 31.46% 11.17% 13.23% Russell Mid-Cap Value Index** 30.81% 8.62% 12.98% The performance quoted represents past performance, which does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Current performance of the Fund may be lower or higher than the performance quoted. The Fund's investment objectives, risks, charges and expenses must be considered carefully before investing. Performance data current to the most recent month end may be obtained by calling 1-800-934-5550. * Return figures reflect any change in price per share and assume the reinvestment of all distributions. ** The Index is an unmanaged benchmark that assumes reinvestment of all distributions and excludes the effect of taxes and fees. The Russell Mid-Cap Value Index is a widely recognized unmanaged index of equity prices and is representative of a broader market and range of securities than is found in the Fund's portfolio. Individuals cannot invest directly in the Index, however, an individual can invest in ETF's or other investment vehicles that attempt to track the performance of a benchmark index. Comparison of the Growth of a $10,000 Investment in the IMS Capital Value Fund and the Russell Mid-Cap Value Index IMS Capital Russell Mid-Cap Value Fund Value Index ($26,643) ($26,250) 8/5/96 10,000.00 10,000.00 6/30/97 12,450.00 13,071.39 6/30/98 13,235.11 16,437.28 6/30/99 15,692.44 17,362.08 6/30/00 16,695.52 15,989.03 6/30/01 17,315.89 19,814.44 6/30/02 17,134.49 20,195.33 6/30/03 20,267.05 20,066.61 6/30/04 26,642.78 26,249.72 The chart above assumes an initial investment of $10,000 made on August 5, 1996 (commencement of Fund operations) and held through June 30, 2004. 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. 3 IMS Strategic Allocation Fund For the 12 months ended June 30, 2004, the IMS Strategic Allocation Fund gained 17.60% compared to the S&P 500's gain of 19.09%. The Fund's strategy for the period was to maintain broad exposure to the equity market with particular emphasis in small and mid-cap stocks, which led the market rally. However, when the market began to consolidate in January, small and mid-cap stocks led the way, which contributed to the Fund's underperformance during the period. The Fund also maintained overweighted positions in specific sectors (technology, oil, banking) up until the second calendar quarter, when they were sold off. Our reasoning for concentrating in these individual sectors is that they tend to outperform the broader market when the market is advancing. We trim back if the market retreats, because individual sectors can be more volatile in such climates. In addition, we are maintaining some exposure to Japan and Asia on the positive news coming out of their economies. We believe the domestic equity market will resume its forward momentum as investors focus on an improving economy and accelerating corporate profits. In addition, the Fund continues to overweight small and mid-cap stocks, because we believe they will be among the strongest performers once the market resumes its advance. Thank you for your investment in IMS Strategic Allocation Fund. /s/ Arthur Nunes /s/ Carl Marker Arthur G. Nunes Carl W. Marker Co-Portfolio Manager Co-Portfolio Manager 4 Investment Results Average Annual Total Returns (for periods ended June 30, 2004) Since Inception One Year (November 5, 2002) -------------- ---------------------- IMS Strategic Allocation Fund* 17.60% 13.93% S&P 500 Index** 19.09% 16.30% The performance quoted represents past performance, which does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Current performance of the Fund may be lower or higher than the performance quoted. The Fund's investment objectives, risks, charges and expenses must be considered carefully before investing. Performance data current to the most recent month end may be obtained by calling 1-800-934-5550. * Return figures reflect any change in price per share and assume the reinvestment of all distributions. ** The Index is an unmanaged benchmark that assumes reinvestment of all distributions and excludes the effect of taxes and fees. The S&P 500 Index is a widely recognized unmanaged index of equity prices and is representative of a broader market and range of securities than is found in the Fund's portfolio. Individuals cannot invest directly in the Index, however, an individual can invest in ETF's or other investment vehicles that attempt to track the performance of a benchmark index. Comparison of the Growth of a $10,000 Investment in the IMS Strategic Allocation Fund and the S&P 500 Index IMS Strategic S&P 500 Allocation Fund Index ($12,419) ($12,834) 11/5/02 10,000.00 10,000.00 12/31/02 9,660.00 9,643.31 3/31/03 9,070.00 9,339.62 6/30/03 10,560.00 10,776.57 9/30/03 10,750.00 11,061.79 12/31/03 12,105.81 12,406.71 3/31/04 12,560.16 12,616.69 6/30/04 12,418.81 12,833.59 The chart above assumes an initial investment of $10,000 made on November 5, 2002 (commencement of Fund operations) and held through June 30, 2004. 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. 5 IMS Strategic Income Fund During the 10 months ended June 30, 2004, the IMS Strategic Income Fund posted a return of 0.33%, compared to its benchmark, the Merrill Lynch US Corporate Master Index, which posted 4.10% for the same period. The threat of rising interest rates held back several holdings in the Fund during the period. After a long, profitable run, for instance, REITs declined on interest rate concerns, and therefore, we sold them. We also sold our investment-grade bonds and closed end bond funds, which are more sensitive to rising rates, and our exposure to them contributed to the Fund's underperformance. Additionally, we trimmed our preferred stocks, except for a few that have relatively high coupons. Proceeds from the sale of these securities were redeployed into high yield bonds, oil royalty trusts and business trusts. Business trusts are similar to REITs, in that they are required to pay out most of their income to investors, but they do not pose the same interest rate risk. Lastly, we increased our weighting in high dividend common stocks. We continued to write covered calls on most of our stock holdings to generate additional income. We believe these portfolio changes have positioned the Fund for a gradually rising interest rate environment, as we are focused on delivering high, consistent income to shareholders. Thank you for your investment in IMS Strategic Income Fund. /s/ Carl Marker Carl W. Marker Portfolio Manager 6 Investment Results Average Annual Total Returns (for periods ended June 30, 2004) Ten Months Since Inception (9/1/03-6/30/04) One Year (November 5, 2002) ------------------ ---------- ------------------- IMS Strategic Income Fund* 0.33% -1.18% 9.74% Merrill Lynch US Corporate Master Index** 4.10% 0.49% 7.82% The performance quoted represents past performance, which does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Current performance of the Fund may be lower or higher than the performance quoted. The Fund's investment objectives, risks, charges and expenses must be considered carefully before investing. Performance data current to the most recent month end may be obtained by calling 1-800-934-5550. * Return figures reflect any change in price per share and assume the reinvestment of all distributions. ** The Index is an unmanaged benchmark that assumes reinvestment of all distributions and excludes the effect of taxes and fees. The Merrill Lynch US Corporate Master Index is a widely recognized unmanaged index of fixed income prices and is representative of a broader market and range of securities than is found in the Fund's portfolio. Individuals cannot invest directly in the Index, however, an individual can invest in ETF's or other investment vehicles that attempt to track the performance of a benchmark index. Comparison of the Growth of a $10,000 Investment in the IMS Strategic Income Fund and the Merrill Lynch US Corporate Master Index IMS Strategic Merrill Lynch US Income Fund Corporate Master Index ($11,669) ($11,334) 11/5/02 10,000.00 10,000.00 12/31/02 10,566.73 10,478.40 3/31/03 11,700.06 10,743.75 6/30/03 11,808.85 11,278.43 9/30/03 11,657.77 11,275.73 12/31/03 11,946.13 11,349.15 3/31/04 12,093.05 11,723.70 6/30/04 11,669.08 11,333.77 The chart above assumes an initial investment of $10,000 made on November 5, 2002 (commencement of Fund operations) and held through June 30, 2004. 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. 7 IMS Funds IMS Capital Value Fund Schedule of Investments June 30, 2004 Common Stocks - 99.33% Shares Value ------------------ ---------------------- Aerospace Technologies - 2.03% Alliant Techsystems, Inc. (a) 28,300 $ 1,792,522 ---------------------- Banks & Financial Services - 10.67% First Horizon National Corp. 34,100 1,550,527 Huntington Bancshares, Inc. 128,700 2,947,230 T. Rowe Price Associates, Inc. 27,000 1,360,800 A.G. Edwards, Inc. 45,000 1,531,350 E*Trade Group, Inc. (a) 184,100 2,052,715 ---------------------- 9,442,622 ---------------------- Chemicals - 4.45% Monsanto Company 42,900 1,651,650 Cytec Industries, Inc. 50,200 2,281,590 ---------------------- 3,933,240 ---------------------- Communications - 5.90% XM Satellite Radio Holdings, Inc. - Class A (a) 28,900 788,681 Harris Corp. 29,200 1,481,900 Centurytel, Inc. 65,900 1,979,636 Sprint Corp. 55,200 971,520 ---------------------- 5,221,737 ---------------------- Computer Related Services & Equipment - 12.71% CheckFree Corp. (a) 27,300 819,000 Computer Sciences Corp. (a) 77,700 3,607,611 Convergys Corp. (a) 81,300 1,252,020 Unisys Corp. (a) 209,200 2,903,696 SunGard Data Systems, Inc. (a) 60,400 1,570,400 Amdocs Ltd. (a) 46,700 1,094,181 ---------------------- 11,246,908 ---------------------- Electrical Components - 3.29% American Power Conversion, Inc. 48,000 943,200 LSI Logic Corp. (a) 258,600 1,970,532 ---------------------- 2,913,732 ---------------------- Energy - 4.68% Great Plains Energy, Inc. 52,600 1,562,220 Amerada Hess Corp. 32,600 2,581,594 ---------------------- 4,143,814 ---------------------- Food & Beverage - 12.79% PepsiAmericas, Inc. 108,200 2,298,168 Adolph Coors Company 41,000 2,965,940 Tyson Foods, Inc. 288,900 6,052,455 ---------------------- 11,316,563 ---------------------- Healthcare - 13.76% Humana, Inc. (a) 121,600 2,055,040 PacifiCare Health Systems, Inc. (a) 64,600 2,497,436 Gentiva Health Services, Inc. (a) 103,900 1,689,414 LifePoint Hospitals, Inc. (a) 46,000 1,712,120 Manor Care, Inc. 62,100 2,029,428 Apria Healthcare Group, Inc. (a) 76,300 2,189,810 ---------------------- 12,173,248 ----------------------
See accompanying notes which are an integral part of the financial statements. 8 IMS Funds IMS Capital Value Fund Schedule of Investments - continued June 30, 2004 Common Stocks - 99.33% - continued Shares Value ------------------ ---------------------- Insurance - 10.42% Aon Corp. 87,800 $ 2,499,666 Lincoln National Corp. 59,100 2,792,475 Loews Corp. 21,300 1,277,148 Nationwide Financial Services, Inc. - Class A 70,400 2,647,744 ---------------------- 9,217,033 ---------------------- Miscellaneous Furniture & Fixtures - 1.51% Hillenbrand Industries, Inc. 22,100 1,335,945 ---------------------- Personal Services - 8.73% Cendant Corp. 28,000 685,440 Equifax, Inc. 69,200 1,712,700 H & R Block, Inc. 31,600 1,506,688 Service Corporation International (a) 518,300 3,819,871 ---------------------- 7,724,699 ---------------------- Pharmaceutical Goods - 4.63% King Pharmaceuticals, Inc. (a) 150,700 1,725,515 Watson Pharmaceuticals, Inc. (a) 31,200 839,280 Bausch & Lomb, Inc. 23,500 1,529,145 ---------------------- 4,093,940 ---------------------- Refuse Systems - 1.69% Republic Services, Inc. 51,700 1,496,198 ---------------------- Retail - 2.07% Schein Henry, Inc. (a) 7,000 441,980 Rite Aid Corp. (a) 266,000 1,388,520 ---------------------- 1,830,500 ---------------------- TOTAL COMMON STOCKS (Cost $74,899,803) 87,882,701 ---------------------- Preferred Stocks - 0.00% Metropolitan Mortgage & Securities, 9.99% (b) 25,000 - ---------------------- TOTAL PREFERRED STOCKS (Cost $482,325) - ---------------------- Money Market Securities - 0.80% First American Prime Obligations Fund, 0.87% (c) 704,895 704,895 ---------------------- TOTAL MONEY MARKET SECURITIES (Cost $704,895) 704,895 ---------------------- TOTAL INVESTMENTS (Cost $76,087,023) - 100.13% $ 88,587,596 ---------------------- Liabilities in excess of other assets - (0.13)% (112,184) ---------------------- TOTAL NET ASSETS - 100.00% $ 88,475,412 ======================
(a) Non-income producing. (b) Security valued at zero due to bankruptcy. (c) Variable rate security; the coupon rate shown represents the rate at June 30, 2004. See accompanying notes which are an integral part of the financial statements. 9 IMS Funds IMS Strategic Allocation Fund Schedule of Investments June 30, 2004 Exchange Traded Funds - 61.69% Shares Value ------------------ ---------------------- iShares S&P MidCap 400 / BARRA Growth Index Fund 6,000 $ 748,740 iShares S&P MidCap 400 / BARRA Value Index Fund 6,400 747,200 iShares MSCI Japan Index Fund 85,000 902,700 iShares S&P 500 / BARRA Value Index Fund 9,100 521,794 iShares S&P SmallCap 600 / BARRA Value Index Fund 8,700 954,390 iShares S&P SmallCap 600 / BARRA Growth Index Fund 9,800 956,382 iShares S&P 500 / BARRA Growth Index Fund 8,700 494,334 iShares MSCI Pacific ex-Japan Index Fund 5,200 380,692 Rydex S&P Equal Weight ETF 47,300 6,761,535 ---------------------- TOTAL EXCHANGE TRADED FUNDS (Cost $11,740,063) 12,467,767 ---------------------- Mutual Funds - 24.10% Rydex Series - Biotechnology Fund 41,347 834,802 Rydex Series Trust - Nova Fund 77,805 1,919,451 Rydex Series - Medius Fund 29,304 833,114 Rydex Series - Mekros Fund 48,801 1,284,445 ---------------------- TOTAL MUTUAL FUNDS (Cost $4,775,000) 4,871,812 ---------------------- Money Market Securities - 12.98% First American Prime Obligations Fund, 0.87% (a) 2,624,269 2,624,269 ---------------------- TOTAL MONEY MARKET SECURITIES (Cost $2,624,269) 2,624,269 ---------------------- TOTAL INVESTMENTS (Cost $19,139,332) - 98.77% $ 19,963,848 ---------------------- Other assets in excess of liabilities - 1.23% 248,608 ---------------------- TOTAL NET ASSETS - 100.00% $ 20,212,456 ======================
(a) Variable rate security; the coupon rate shown represents the yield at June 30, 2004. See accompanying notes which are an integral part of the financial statements. 10 IMS Funds IMS Strategic Income Fund Schedule of Investments June 30, 2004 Common Stocks - 26.39% Shares Value ------------------ ---------------------- Automotive Parts - 1.05% Genuine Parts Company (a) 13,600 $ 539,648 ---------------------- Tobacco Products - 0.92% UST, Inc. (a) 13,100 471,600 ---------------------- Chemicals - 0.97% Olin Corp. (a) 28,200 496,884 ---------------------- Crude Petroleum & Natural Gas - 7.02% Enterprise Products Partners LP (a) 33,900 720,375 Hugoton Royalty Trust 35,500 811,530 Pengrowth Energy Trust 54,000 754,920 Provident Energy Trust 91,600 706,236 Petrofund Energy Trust 54,550 609,323 ---------------------- 3,602,384 ---------------------- Firearms - 1.01% Sturm, Ruger & Company, Inc. (a) 43,000 520,730 ---------------------- Investment Advice - 3.71% Alliance Capital Management Holding LP (a) 31,400 1,066,030 JPMorgan Chase & Co. (a) 21,600 837,432 ---------------------- 1,903,462 ---------------------- Food & Beverage - 3.21% ConAgra Foods, Inc. (a) 26,800 725,744 H.J. Heinz Company (a) 23,500 921,200 ---------------------- 1,646,944 ---------------------- Pharmaceutical Preparations - 1.60% Bristol-Myers Squibb Co. (a) 33,400 818,300 ---------------------- Packaging Products - 2.10% Chesapeake Corp. (a) 21,400 570,952 Tupperware Corp. (a) 26,200 509,066 ---------------------- 1,080,018 ---------------------- Services - 3.05% R.R. Donnelly & Sons Company (a) 16,600 548,132 GATX Corp. 19,000 516,800 The ServiceMaster Company (a) 40,700 501,424 ---------------------- 1,566,356 ---------------------- Telephone Communications - 1.75% SBC Communications, Inc. (a) 37,100 899,675 ---------------------- TOTAL COMMON STOCKS (Cost $13,810,986) 13,546,001 ----------------------
See accompanying notes which are an integral part of the financial statements. 11 IMS Funds IMS Strategic Income Fund Schedule of Investments - Continued June 30, 2004 Shares Value ------------------ ---------------------- Preferred Securities - 8.14% Ameren Corp., 9.750% 43,000 $ 1,144,875 AES Trust III, 6.750% 11,500 493,063 Electronic Data Systems Corp., 7.625% 55,400 948,725 Hillman Group Capital Trust, 11.600% 29,700 801,900 United Rentals Trust, 6.500% 11,500 506,000 Metropolitan Mortgage & Securities, Inc., 9.9984% (b) 118,400 - Western United Holding, 8.5008% (c) 26,804 284,658 ---------------------- TOTAL PREFERRED SECURITIES (Cost $7,643,229) 4,179,221 ---------------------- Mutual Funds - 42.73% Open End Mutual Funds - 38.33% Rydex Series - Juno Fund 308,895 6,486,792 J.P. Morgan Fleming Emerging Markets Debt Fund 393,706 3,515,793 Fidelity Advisor Floating-Rate High Income Fund 440,766 4,367,990 Eaton Vance Floating-Rate High Income Fund 233,402 2,257,002 TransForce Income Fund 62,500 503,125 Specialty Foods Group Income Fund 114,000 560,880 KCP Income Fund 74,000 488,400 Connors Bros. Income Fund 41,600 512,096 Arctic Glacier Income Fund 55,500 486,180 ACS Media Income Fund 66,600 499,500 ---------------------- 19,677,758 ---------------------- Closed End Mutual Funds - 4.40% ING Senior Income Fund 145,978 2,258,272 ---------------------- TOTAL MUTUAL FUNDS (Cost $22,041,412) 21,936,030 ---------------------- Principal Amount ------------------ Corporate Bonds - 21.45% Bally Total Fitness Holdings, Series D, 9.875%, 10/15/2007 $ 1,300,000 1,085,500 Goodyear Tire & Rubber Notes, 8.500%, 3/15/2007 580,000 593,050 Land O Lakes, Inc., 8.750%, 11/15/2011 1,500,000 1,387,500 Charter Communications Holdings, LLC, 10.750%, 10/1/2009 1,000,000 845,000 Dobson Communications Corp., 8.875%, 10/1/2013 600,000 459,000 Trico Marine Services, Inc., 8.875%, 5/15/2012 (d) 800,000 428,000 Winn-Dixie Stores, Inc., 8.875%, 4/1/2008 2,600,000 2,470,000 Sonat, Inc., 7.625%, 7/15/2011 600,000 538,500 Tenet Healthcare Corp., 6.375%, 12/1/2011 600,000 528,000 Level 3 Communications, Inc., 11.250%, 3/15/2010 2,000,000 1,595,000 JL French Automotive Castings, Inc., Series B, 11.500%, 6/1/2009 670,000 458,950 Lucent Technologies, 6.450%, 3/15/2029 800,000 622,000 ---------------------- TOTAL CORPORATE BONDS (Cost $11,076,582) 11,010,500 ----------------------
See accompanying notes which are an integral part of the financial statements. 12 IMS Funds IMS Strategic Income Fund Schedule of Investments - Continued June 30, 2004 Shares Value ------------------ ---------------------- Certificates of Deposit - 0.00% Summit Securities CD, 8.50%, 11/29/2007 (e) 250,000 $ - Summit Securities CD, 8.50%, 12/26/2007 (e) 300,000 - ---------------------- TOTAL CERTIFICATES OF DEPOSIT (Cost $550,000) - ---------------------- Shares ------------------ Money Market Securities - 0.84% First American Prime Obligations Fund, 0.87% (f) 430,097 430,097 ---------------------- TOTAL MONEY MARKET SECURITIES (Cost $430,097) 430,097 ---------------------- TOTAL INVESTMENTS (Cost $55,552,306) - 99.55% $ 51,101,849 ---------------------- Cash and other assets in excess of liabilities - 0.45% 232,545 ---------------------- TOTAL NET ASSETS - 100.00% $ 51,334,394 ======================
(a) Portion of security is pledged as collateral for call options written. (b) Security valued at zero due to bankruptcy. (c) Subsidiary companies have filed bankruptcy. (d) Issue in default. (e) Company has filed bankruptcy. All interest and principal payments have been halted. (f) Variable rate security; the coupon rate shown represents the rate at June 30, 2004. See accompanying notes which are an integral part of the financial statements. 13 IMS Funds IMS Strategic Income Fund Schedule of Investments - Continued June 30, 2004 Options Written as of June 30, 2004 Shares Subject Common Stocks / Expiration Date @ Exercise Price to Call Value - --------------------------------------------------------------------------------- ------------------ ---------------------- Alliance Capital Management Holding LP / July 2004 @ 35 31,400 $ 4,710 Bristol-Myers Squibb Co. / September 2004 @ 27.50 33,400 5,010 Chesapeake Corp. / August 2004 @ 25 21,400 32,100 ConAgra Foods, Inc. / September 2004 @ 30 26,800 2,680 Enterprise Products Partners LP / September 2004 @ 22.50 5,000 750 Genuine Parts Company / August 2004 @ 40 13,600 10,880 H.J. Heinz Company / September 2004 @ 40 23,500 14,100 JPMorgan Chase & Co. / August 2004 @ 40 21,600 10,800 Olin Corp. / August 2004 @ 17.50 28,200 16,920 R.R. Donnelly & Sons Company / September 2004 @ 35 16,600 8,300 SBC Communications, Inc. / October 2004 @ 27.50 37,100 3,710 Sturm, Ruger & Company, Inc. / July 2004 @ 12.50 43,000 8,600 The ServiceMaster Company / July 2004 @ 12.50 40,700 4,070 Tupperware Corp. / October 2004 @ 20 26,200 18,340 UST, Inc. / October 2004 @ 40 13,100 3,275 ---------------------- TOTAL CALL OPTIONS WRITTEN (Premiums received $135,736) $ 144,245 ----------------------
See accompanying notes which are an integral part of the financial statements. 14 IMS Funds Statements of Assets and Liabilities June 30, 2004 IMS Capital IMS Strategic IMS Strategic Value Fund Allocation Fund Income Fund ---------------- ------------------- ------------------ Assets Investments in securities: At cost $ 76,087,023 $ 19,139,332 $ 55,552,306 ================ =================== ================== At value $ 88,587,596 $ 19,963,848 $ 51,101,849 Cash - - 5,512 Interest receivable 1,200 2,145 270,023 Dividends receivable 69,085 27,763 118,546 Receivable for fund shares sold 439,348 246,472 128,591 Receivable for investments sold - - 18,249 Prepaid expenses 14,059 2,570 8,153 ---------------- ------------------- ------------------ Total assets 89,111,288 20,242,798 51,650,923 ---------------- ------------------- ------------------ Liabilities Call options written (premiums received $135,736) - - 144,245 Payable to advisor 110,860 9,934 64,094 Payable for fund shares redeemed 489,557 - 86,281 Payable to trustees - 13 34 Accrued expenses 35,459 20,395 21,875 ---------------- ------------------- ------------------ Total liabilities 635,876 30,342 316,529 ---------------- ------------------- ------------------ Net Assets: $ 88,475,412 $ 20,212,456 $ 51,334,394 ================ =================== ================== Net Assets consist of: Paid in capital $ 71,930,195 $ 18,876,175 $ 53,674,188 Accumulated undistributed net realized gain on investments 4,044,644 511,765 2,119,172 Net unrealized appreciation/(depreciation) on investments 12,500,573 824,516 (4,458,966) ---------------- ------------------- ------------------ $ 88,475,412 $ 20,212,456 $ 51,334,394 ================ =================== ================== Shares outstanding 4,928,012 1,642,743 4,890,444 ---------------- ------------------- ------------------ (unlimited number of shares authorized) Net asset value and offering price per share $ 17.95 $ 12.30 $ 10.50 ================ =================== ================== Redemption price per share (a) $ 17.86 $ 12.24 $ 10.45 ================ =================== ==================
(a) The redemption price per share reflects a redemption fee of 0.50% on shares redeemed within 90 days of purchase. See accompanying notes which are an integral part of the financial statements. 15 IMS Funds Statements of Operations Year ended June 30, 2004 IMS Capital IMS Strategic IMS Strategic Value Fund Allocation Fund Income Fund (a) ------------------- ---------------------- ------------------ Investment Income Dividend income $ 579,359 $ 74,653 $ 2,030,212 Interest income 12,779 6,671 894,201 ------------------- ---------------------- ------------------ Total Income 592,138 81,324 2,924,413 ------------------- ---------------------- ------------------ Expenses Investment advisor fee 754,922 143,707 451,167 Administration expenses 56,333 30,000 31,955 Transfer agent expenses 34,014 20,094 19,135 Fund accounting expenses 25,748 16,573 17,108 Registration expenses 13,452 2,141 7,104 Legal expenses 12,859 9,016 7,475 Custodian expenses 18,444 5,601 10,426 Audit expenses 10,806 8,227 10,349 Insurance expenses 4,743 1,186 2,074 Pricing expenses 4,022 2,574 2,883 Miscellaneous expenses 16,724 4,274 10,882 Printing expenses 4,750 4,562 1,784 Trustees expenses 1,954 2,285 2,476 Advisor reimbursement recouped (b) - - 11,550 ------------------ ---------------------- ------------------ Total Expenses 958,771 250,240 586,368 Waived advisory fees (b) (3,511) (17,684) - Waived adminstrator fees - (8,424) - ------------------ ---------------------- ------------------ Net operating expenses 955,260 224,132 586,368 ------------------ ---------------------- ------------------ Net Investment Income/(Loss) (363,122) (142,808) 2,338,045 ------------------ ---------------------- ------------------ Realized & Unrealized Gain/(Loss) Net realized gain on investment securities 6,421,483 717,462 2,236,637 Net realized gain/(loss) on option transactions (26,707) - 49,995 Capital gain income from investment companies - - 46,225 Net change in unrealized appreciation/(depreciation) on investment securities 6,896,162 603,978 (4,917,961) ------------------ ---------------------- ------------------ Net realized and unrealized gain/(loss) on investment securities 13,290,938 1,321,440 (2,585,104) ------------------ ---------------------- ------------------ Net increase/(decrease) in net assets resulting from operations $ 12,927,816 $ 1,178,632 $ (247,059) ================== ====================== ==================
(a) For the period September 1, 2003 through June 30, 2004. (b) See note 3 to the financial statements. See accompanying notes which are an integral part of the financial statements. 16 IMS Funds Statements of Changes In Net Assets IMS Capital Value Fund ---------------------------------------------- Year ended Year ended Increase/(Decrease) in Net Assets due to: June 30, 2004 June 30, 2003 ---------------------- ------------------- Operations Net investment loss $ (363,122) $ (61,015) Net realized gain on investment securities 6,421,483 320,703 Net realized (loss) on option transactions (26,707) (236,581) Net change in unrealized appreciation/(depreciation) 6,896,162 4,174,278 ---------------------- ------------------- Net increase in net assets resulting from operations 12,927,816 4,197,385 ---------------------- ------------------- Distributions From net investment income - (39,209) From net realized gain (1,560,781) - From return of capital - (31,729) ---------------------- ------------------- Total distributions (1,560,781) (70,938) ---------------------- ------------------- Capital Share Transactions Proceeds from shares sold 60,376,393 14,575,612 Reinvestment of distributions 1,544,187 68,638 Amount paid for shares repurchased (16,217,001) (4,509,797) ---------------------- ------------------- Net increase in net assets resulting from share transactions 45,703,579 10,134,453 ---------------------- ------------------- Total Increase in Net Assets 57,070,614 14,260,900 ---------------------- ------------------- Net Assets Beginning of period 31,404,798 17,143,898 ---------------------- ------------------- End of period $ 88,475,412 $ 31,404,798 ====================== =================== Accumulated undistributed net investment income included in net assets at end of period $ - $ - ---------------------- ------------------- Capital Share Transactions Shares sold 3,546,820 1,185,162 Shares issued in reinvestment of distributions 93,986 6,063 Shares repurchased (947,930) (393,648) ---------------------- ------------------- Net increase in capital shares 2,692,876 797,577 ====================== ===================
See accompanying notes which are an integral part of the financial statements. 17 IMS Funds Statements of Changes In Net Assets - continued IMS Strategic Allocation Fund ---------------------------------------------- Year ended Period ended Increase/(Decrease) in Net Assets due to: June 30, 2004 June 30, 2003 (a) ---------------------- ------------------- Operations Net investment loss $ (142,808) $ (13,066) Net realized gain on investment securities 717,462 47,861 Net change in unrealized appreciation/(depreciation) 603,978 220,538 ---------------------- ------------------- Net increase in net assets resulting from operations 1,178,632 255,333 ---------------------- ------------------- Distributions From net realized gain (97,684) - ---------------------- ------------------- Total distributions (97,684) - ---------------------- ------------------- Capital Share Transactions Proceeds from shares sold 17,760,420 4,095,810 Reinvestment of distributions 96,390 - Amount paid for shares repurchased (2,625,664) (450,781) ---------------------- ------------------- Net increase in net assets resulting from share transactions 15,231,146 3,645,029 ---------------------- ------------------- Total Increase in Net Assets 16,312,094 3,900,362 ---------------------- ------------------- Net Assets Beginning of period 3,900,362 - ---------------------- ------------------- End of period $ 20,212,456 $ 3,900,362 ====================== =================== Accumulated undistributed net investment income included in net assets at end of period $ - $ - ---------------------- ------------------- Capital Share Transactions Shares sold 1,482,858 416,154 Shares issued in reinvestment of distributions 8,215 - Shares repurchased (217,846) (46,638) ---------------------- ------------------- Net increase in capital shares 1,273,227 369,516 ====================== ===================
(a) For period of November 5, 2002 (commencement of operations) through June 30, 2003. See accompanying notes which are an integral part of the financial statements. 18 IMS Funds Statements of Changes In Net Assets - continued IMS Strategic Income Fund ---------------------------------------------- Period ended Period ended Increase/(Decrease) in Net Assets due to: June 30, 2004 (a) August 31, 2003 (b) ---------------------- ------------------- Operations Net investment income $ 2,338,045 $ 649,544 Net realized gain/(loss) on investment securities 2,282,862 (60,457) Net realized gain on option transactions 49,995 - Net change in unrealized appreciation/(depreciation) (4,917,961) 458,995 ---------------------- ------------------- Net increase/(decrease) in net assets resulting from operations (247,059) 1,048,082 ---------------------- ------------------- Distributions From net investment income (2,434,737) (632,612) From net realized gain (73,467) - ---------------------- ------------------- Total distributions (2,508,204) (632,612) ---------------------- ------------------- Capital Share Transactions Proceeds from shares sold 38,730,331 28,991,779 Reinvestment of distributions 2,116,574 562,786 Amount paid for shares repurchased (14,337,696) (2,389,587) ---------------------- ------------------- Net increase in net assets resulting from share transactions 26,509,209 27,164,978 ---------------------- ------------------- Total Increase in Net Assets 23,753,946 27,580,448 ---------------------- ------------------- Net Assets Beginning of period 27,580,448 - ---------------------- ------------------- End of period $ 51,334,394 $ 27,580,448 ====================== =================== Accumulated undistributed net investment income included in net assets at end of period $ - $ 16,932 ---------------------- ------------------- Capital Share Transactions Shares sold 3,548,597 2,651,244 Shares issued in reinvestment of distributions 195,836 51,196 Shares repurchased (1,338,992) (217,437) ---------------------- ------------------- Net increase in capital shares 2,405,441 2,485,003 ====================== ===================
(a) For period of September 1, 2003 through June 30, 2004. The Fund elected to change its fiscal year end to June 30. (b) For period of November 5, 2002 (commencement of operations) through August 31, 2003. See accompanying notes which are an integral part of the financial statements. 19 IMS Funds Financial Highlights For a share outstanding throughout the period IMS Capital Value Fund Year ended Year ended Year ended Year ended Year ended June 30, 2004 June 30, 2003 June 30, 2002 June 30, 2001 June 30, 2000 ----------------- ---------------- ---------------- ---------------- ------------- Selected Per Share Data Net asset value, beginning of period $ 14.05 $ 11.93 $ 13.87 $ 13.91 $ 14.56 ----------------- ---------------- ---------------- ---------------- ------------- Income from investment operations Net investment income/(loss) (0.10) (a) (0.04) 0.04 (0.05) (0.05) Net realized and unrealized gain/(loss) 4.48 2.21 (0.19) 0.50 0.88 ----------------- ---------------- ---------------- ---------------- ------------- Total from investment operations 4.38 2.17 (0.15) 0.45 0.83 ----------------- ---------------- ---------------- ---------------- ------------- Less Distributions to shareholders: From net investment income - (0.03) - - - From net realized gain (0.48) - (1.79) (0.49) (1.48) From return of capital - (0.02) - - - ----------------- ---------------- ---------------- ---------------- ------------- Total distributions (0.48) (0.05) (1.79) (0.49) (1.48) ----------------- ---------------- ---------------- ---------------- ------------- Paid in capital from redemption fees - (b) - - - - ----------------- ---------------- ---------------- ---------------- ------------- Net asset value, end of period $ 17.95 $ 14.05 $ 11.93 $ 13.87 $ 13.91 ================= ================ ================ ================ ============= Total Return (c) 31.46% 18.28% -1.05% 3.72% 6.39% Ratios and Supplemental Data Net assets, end of period (000) $ 88,475 $ 31,405 $ 17,144 $ 11,488 $11,585 Ratio of expenses to average net assets 1.59% 1.59% 1.59% 1.59% 1.59% Ratio of expenses to average net assets before waiver & reimbursement 1.60% 2.05% 2.23% 2.28% 2.08% Ratio of net investment income/(loss) to average net assets (0.60)% (0.34)% 0.29% (0.39)% (0.36)% Ratio of net investment income/(loss) to average net assets before waiver & reimbursement (0.61)% (0.79)% (0.35)% (1.09)% (0.84)% Portfolio turnover rate 46.69% 44.72% 33.40% 77.87% 75.69%
(a) Net investment loss per share is based on average shares outstanding during the year. (b) Redemption fees resulted in less than $0.01 per share. (c) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends. See accompanying notes which are an integral part of the financial statements. 20 IMS Funds Financial Highlights For a share outstanding throughout the period IMS Strategic Allocation Fund Year ended Period ended June 30, 2004 June 30, 2003 (a) ----------------- ----------------- Selected Per Share Data Net asset value, beginning of period $ 10.56 $ 10.00 ----------------- ----------------- Income from investment operations Net investment (loss) (0.15) (b) (0.05) Net realized and unrealized gain/(loss) 2.00 0.61 ----------------- ----------------- Total from investment operations 1.85 0.56 ----------------- ----------------- Less Distributions to shareholders: From net realized gain (0.11) - ----------------- ----------------- Total distributions (0.11) - ----------------- ----------------- Paid in capital from redemption fees - (c) - ----------------- ----------------- Net asset value, end of period $ 12.30 $ 10.56 ================= ================= Total Return (d) 17.60% 5.60% (e) Ratios and Supplemental Data Net assets, end of period (000) $ 20,212 $ 3,900 Ratio of expenses to average net assets 1.96% 1.96% (f) Ratio of expenses to average net assets before waiver & reimbursement 2.19% 4.75% (f) Ratio of net investment income/(loss) to average net assets (1.25)% 0.85% (f) Ratio of net investment income/(loss) to average net assets before waiver & reimbursement (1.48)% (3.65)%(f) Portfolio turnover rate 146.64% 226.36%
(a) For the period November 5, 2002 (Commencement of operations) through June 30, 2003. (b) Net investment loss per share is based on average shares outstanding during the year. (c) Redemption fees resulted in less than $0.01 per share. (d) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends. (e) Not annualized. (f) Annualized. See accompanying notes which are an integral part of the financial statements. 21 IMS Funds Financial Highlights For a share outstanding throughout the period IMS Strategic Income Fund Period ended Period ended June 30, 2004 (a) August 31, 2003 (b) ------------------- ------------------- Selected Per Share Data Net asset value, beginning of period $ 11.10 $ 10.00 ------------------- ------------------- Income from investment operations Net investment income 0.60 (c) 0.61 Net realized and unrealized gain/(loss) (0.56) 1.00 ------------------- ------------------- Total from investment operations 0.04 1.61 ------------------- ------------------- Less Distributions to shareholders: From net investment income (0.62) (0.51) From net realized gain (0.02) - ------------------- ------------------- Total distributions (0.64) (0.51) ------------------- ------------------- Paid in capital from redemption fees - (d) - ------------------- ------------------- Net asset value, end of period $ 10.50 $ 11.10 =================== =================== Total Return (e) (f) 0.33% 16.31% Ratios and Supplemental Data Net assets, end of period (000) $ 51,334 $ 27,580 Ratio of expenses to average net assets (g) 1.63% 1.96% Ratio of expenses to average net assets before waiver & reimbursement (g) 1.63% 2.14% Ratio of net investment income to average net assets (g) 6.52% 6.77% Ratio of net investment income to average net assets before waiver & reimbursement (g) 6.52% 6.58% Portfolio turnover rate 163.53% 18.01%
(a) For the period September 1, 2003 to June 30, 2004. The Fund elected to change its year end to June 30. (b) For the period November 5, 2002 (commencement of operations) to August 31, 2003. (c) Net investment income per share is based on average shares outstanding during the year. (d) Redemption fees resulted in less than $0.01 per share. (e) Not annualized. (f) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends. (g) Annualized. See accompanying notes which are an integral part of the financial statements. 22 IMS Funds Notes to Financial Statements June 30, 2004 NOTE 1. ORGANIZATION IMS Capital Value Fund (the "Capital Value Fund") was organized as a diversified series of AmeriPrime Funds (the "Trust") on July 25, 1996 and commenced operations on August 5, 1996. The IMS Strategic Allocation Fund (the "Allocation Fund") was organized as a non-diversified series of the Trust on September 30, 2002 and commenced operations on November 5, 2002. The IMS Strategic Income Fund (the "Income Fund") was organized as a non-diversified series of the Trust on September 30, 2002 and commenced operations on November 5, 2002. The Trust is an open-end investment company established under the laws of Ohio by an Agreement and Declaration of Trust dated August 8, 1995 (the "Trust Agreement"). The Trust Agreement permits the Trustees to issue an unlimited number of shares of beneficial interest of separate series. Each Fund is one of a series of funds currently authorized by the Trustees. The investment objective of the Capital Value Fund is to provide long-term growth from capital appreciation, dividends and interest. The investment objective of the Allocation Fund is to provide long-term growth from capital appreciation, dividends and interest. The investment objective of the Income Fund is to provide current income. The investment advisor of each Fund is IMS Capital Management, Inc. (the "Advisor"). NOTE 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by each Fund in the preparation of its financial statements. Securities Valuations - Equity 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. Securities that are traded on any stock exchange are generally valued by the pricing service at the last quoted sale price. Lacking a last sale price, an exchange traded security is generally valued by the pricing service at its last bid price. Securities traded in the NASDAQ over-the-counter market are generally valued by the pricing service at the NASDAQ Official Closing Price. When market quotations are not readily available, when the Advisor determines that the market quotation or the price provided by the pricing service does not accurately reflect the current market value or when restricted or illiquid securities are being valued, such securities are valued as determined in good faith by the Advisor, in conformity with guidelines adopted by and subject to review of the Board of Trustees of the Trust (the "Board"). Fixed income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Advisor believes such prices accurately reflect the fair market value of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. 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, subject to review of the Board. Short term investments in fixed income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value. Option writing - When each Fund writes an option, an amount equal to the premium received by each Fund is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated by each Fund on the expiration date as realized gains from investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. 23 IMS Funds Notes to Financial Statements June 30, 2004 - continued NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether each Fund has realized a gain or loss. Each Fund as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option. Federal Income Taxes- The Funds' policy is to continue to comply with the requirements of subchapter M of the Internal Revenue Code that are applicable to regulated investment companies and to distribute all its taxable income to its shareholders. Therefore, no federal income tax provision is required. Security Transactions and Related Income- Each Fund follows industry practice and records security transactions on the trade date. The specific identification method is used for determining gains or losses for financial statements and income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Discounts and premiums on securities purchased are amortized over the life of the respective securities. Dividends and Distributions- The Income Fund intends to distribute substantially all of its net investment income as dividends to its shareholders on a monthly basis. The Capital Value Fund and Allocation Fund intend to distribute substantially all of their net investment income as dividends to their shareholders on at least an annual basis. Each Fund intends to distribute its net realized long term capital gains and its net realized short term capital gains at least once a year. Dividends to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of the net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications will have no effect on net assets, results of operations or net asset values per share of the Fund. For the fiscal year and period ended June 30, 2004, net investment loss of $363,122, $142,808 and $79,760 for the Capital Value, Allocation and Income Funds, respectively, was reclassed to accumulated undistributed net realized short-term gains. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Each Fund retains IMS Capital Management, Inc. to manage its investments. Under the terms of the respective management agreements (the "Agreements"), the Advisor manages each Fund's investments subject to approval of the Board. As compensation for its management services, the Funds are obligated to pay the Advisor a fee computed and accrued daily and paid monthly at an annual rate of 1.26% of the average daily net assets of each Fund. For the fiscal year and period ended June 30, 2004, the Advisor earned fees, before reimbursement, of $754,922, $143,707 and $451,167 from the Capital Value Fund, Allocation Fund and Income Fund, respectively. The Advisor has contractually agreed to waive all or a portion of its fees and/or reimburse expenses of each Fund, but only to the extent necessary to maintain total operating expenses (excluding brokerage costs, borrowing costs, taxes and extraordinary expenses) at 1.59% of average daily net assets with respect to the Capital Value Fund, and 1.96% of average daily net assets with respect to the Allocation Fund and Income Fund, through October 31, 2006. For the fiscal year ended June 30, 2004, the Advisor reimbursed expenses of $3,511 for the Capital Value Fund and $17,684 for the Allocation Fund. With respect to the Allocation Fund and Income Fund, any waiver or reimbursement of organizational or operating expenses by the Advisor is subject to repayment by the applicable Fund in the first, second and third fiscal years 24 IMS Funds Notes to Financial Statements June 30, 2004 - continued NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued following the year in which any such reimbursement or waiver occurs, if the Fund is able to make the payment without exceeding the above described expense limitations. For the period ended June 30, 2004, the Income Fund repaid $11,550 to the Advisor. The remaining amounts subject to repayment by the Allocation and Income Funds, pursuant to the aforementioned conditions, at June 30, 2004, were as follows: To be repaid Fund Amount by June 30, ------------------- ------------ -------------- Allocation Fund $ 42,945 2006 17,684 2007 Income Fund 6,302 2006 At June 30, 2004, the Advisor was owed $110,860, $9,934, and $64,094 from the Capital Value Fund, Allocation Fund and Income Fund, respectively, for its advisory services. Each 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 services, including all regulatory reporting and necessary office equipment and personnel. For those services Unified receives a monthly fee from each Fund equal to an annual rate of 0.10% of the Fund's average daily net assets under $50 million, 0.07% of the Fund's average daily net assets from $50 million to $100 million, 0.05% of the Fund's average daily net assets from $100 million to $150 million, and 0.03% of the Fund's average daily net assets over $150 million, (subject to a minimum fee of $2,500 per month). For the fiscal year and period ended June 30, 2004, Unified earned $56,333, $30,000, and $31,955 from the Capital Value Fund, Allocation Fund, and Income Fund, respectively. For the fiscal year ended June 30, 2004, Unified waived administrative fees of $8,424 for the Allocation Fund. Each Fund also retains Unified to act as each Fund's transfer agent and fund accountant. For its services as transfer agent, Unified receives a monthly fee from each Fund of $1.25 per shareholder (subject to a minimum monthly fee of $1,250), plus out-of-pocket expenses, for these transfer agency services. For the fiscal year and period ended June 30, 2004, Unified received fees of $19,008, $13,465, and $13,058 from the Capital Value Fund, Allocation Fund, and Income Fund, respectively for transfer agent services provided to the Funds and $15,006, $6,629, and $6,077 from the Capital Value Fund, Allocation Fund, and Income Fund, respectively, in reimbursement for out-of-pocket expenses incurred in providing transfer agent services to the Funds. For its services as fund accountant, Unified receives an annual fee from each Fund equal to 0.05% of the Fund's assets up to $50 million, 0.04% of the Fund's assets from $50 million to $100 million, 0.03% of the Fund's assets from $100 million to $150 million, and 0.02% of the Fund's net assets over $150 million (subject to various monthly minimum fees, the maximum being $1,666). For the fiscal year and period ended June 30, 2004, Unified earned $25,748, $16,573, and $17,108 from the Capital Value Fund, Allocation Fund, and Income Fund, respectively. Certain Trustees and the officers of the Trust are employees of Unified and/or shareholders of Unified Financial Services, Inc. (the parent of Unified). Each Fund retains Unified Financial Securities, Inc., (the "Distributor") a wholly owned subsidiary of Unified Financial Services, Inc., to act as the principal distributor of its shares. There were no payments made to the Distributor by the Funds for the fiscal year and period ended June 30, 2004. Certain Trustees and the officers of the Trust have an ownership interest in Unified Financial Services, Inc. (the parent company of the Distributor), and an officer of the Trust is an officer of the Distributor. As a result, those persons may be deemed to be affiliates of the Distributor. 25 IMS Funds Notes to Financial Statements June 30, 2004 - continued NOTE 4. INVESTMENTS For the fiscal year and period ended June 30, 2004, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations were as follows: Capital Value Allocation Income Fund Fund Fund ---------------- ----------------- --------------- Purchases U.S. Government Obligations $ - $ - $ - Other 72,537,526 27,618,425 94,845,887 Sales U.S. Government Obligations $ - $ - $ - Other 26,600,787 14,637,733 67,066,982
As of June 30, 2004, the net unrealized appreciation / (depreciation) of investments for tax purposes was as follows: Capital Value Allocation Income Fund Fund Fund ---------------- ------------- ---------------- Gross Appreciation $ 14,056,461 $ 845,479 $ 724,403 Gross (Depreciation) (1,636,704) (64,333) (5,227,127) ---------------- ------------- ---------------- Net Appreciation/(Depreciation) on Investments $ 12,419,757 $ 781,146 $ (4,502,724) ================ ============= ================
At June 30, 2004, the aggregate cost of securities for federal income tax purposes was $76,167,839, $19,182,702, and $55,596,064 for the Capital Value Fund, Allocation Fund, and Income Fund, respectively. The difference between book cost and tax cost represents the tax deferral of losses on wash sales. NOTE 5. ESTIMATES Preparation of financial statements in accordance with accounting principles generally accepted in the United States of America 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. BENEFICIAL OWNERSHIP 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 June 30, 2004, National Financial Securities Corp. ("National Financial") held 39.02% of the Capital Value Fund, 79.09% of the Allocation Fund, and 53.39% of the Income Fund, in an omnibus account for the benefit of others. As a result, National Financial may be deemed to control each Fund. 26 IMS Funds Notes to Financial Statements June 30, 2004 - continued NOTE 7. WRITTEN CALL OPTIONS Capital Value Fund. As of June 30, 2004, the Capital Value Fund had no liabilities for written options. Transactions in written call options during the fiscal year ended June 30, 2004 for the Capital Value Fund were as follows: Number of Premiums Contracts Received ------------- ------------- Options outstanding at June 30, 2003 758 $ 104,521 Written options - - Options terminated in closing purchase transactions - - Options expired - - Options exercised (758) (104,521) ------------- ------------- Options outstanding at June 30, 2004 - $ - ============= ============= Income Fund. As of June 30, 2004, portfolio securities valued at $9,533,067 were held in escrow by the custodian as cover for written call options by the Income Fund. Transactions in written call options during the period ended June 30, 2004 for the Income Fund were as follows: Number of Premiums Contracts Received ------------ ------------- Options outstanding at August 31, 2003 - $ - Written options 5,040 185,731 Options terminated in closing purchase transactions - - Options expired (223) (11,784) Options exercised (1,001) (38,211) ------------- ------------ Options outstanding at June 30, 2004 3,816 $ 135,736 ============= ============ NOTE 8. DISTRIBUTIONS TO SHAREHOLDERS Capital Value Fund. On December 18, 2003, the Capital Value Fund paid capital gains distributions of $0.4759 per share to shareholders of record on December 17, 2003. The tax characterization of distributions for the fiscal years ended June 30, 2004 and 2003 was as follows: Distributions paid from: 2004 2003 ---------------- --------------- Ordinary income $ - $ 39,209 Short-term Capital Gain 680,525 - Long-term Capital Gain 880,256 - Return of Capital - 31,729 --------------- --------------- $ 1,560,781 $ 70,938 ================ =============== 27 IMS Funds Notes to Financial Statements June 30, 2004 - continued NOTE 8. DISTRIBUTIONS TO SHAREHOLDERS - continued Allocation Fund. On December 18, 2003, the Allocation Fund paid a short-term capital gain distribution of $0.1134 per share to shareholders of record on December 17, 2003. The tax characterization of distributions for the fiscal year ended June 30, 2004 and period ended June 30, 2003 was as follows: Distributions paid from: 2004 2003 --------------- ------------- Ordinary income $ - $ - Short-term Capital Gain 97,684 - Long-term Capital Gain - - - --------------- ------------- $ 97,684 $ - =============== ============= Income Fund. For the period ended June 30, 2004, the Income Fund paid monthly income distributions totaling $0.6199 per share. On December 18, 2003, the Income Fund paid a short-term capital gain distribution of $0.0196 per share to shareholders of record on December 17, 2003. The tax characterization of distributions for periods ended June 30, 2004 and 2003 was as follows: Distributions paid from: 2004 2003 --------------- ------------- Ordinary income $ 2,434,737 $ 632,612 Short-term Capital Gain 73,467 - Long-term Capital Gain - - --------------- ------------- $ 2,508,204 $ 632,612 =============== ============= As of June 30, 2004, the components of distributable earnings/(accumulated losses) on a tax basis were as follows: Capital Value Allocation Income Fund Fund Fund ------------- ------------- ------- Undistributed ordinary income $ 656,675 $ 398,506 $ 601,454 Undistributed long-term capital gain 3,468,785 156,629 1,561,476 Unrealized appreciation/(depreciation) 12,419,757 781,146 (4,502,724) ------------- ------------- --------- $16,545,217 $ 1,336,281 $ (2,339,794) ============ ============= ========== The difference between book basis and tax basis unrealized appreciation/(depreciation) is attributable to the tax deferral of losses on wash sales. NOTE 9. CHANGE IN ACCOUNTANTS On March 3, 2004, McCurdy & Associates CPA's, Inc. ("McCurdy") notified the Funds of its intention to resign as the Funds' independent auditors upon selection of replacement auditors. On March 14, 2004, the Board and the Funds' Audit Committee selected Cohen McCurdy, Ltd. ("Cohen") to replace McCurdy as the Funds' auditors for the fiscal year ending June 30, 2004 to be effective upon the resignation of McCurdy. 28 IMS Funds Notes to Financial Statements June 30, 2004 - continued NOTE 9. CHANGE IN ACCOUNTANTS - continued On March 14, 2004, upon receipt of notice that Cohen was selected as the Funds' auditor, McCurdy, whose audit practice was acquired by Cohen, resigned as independent auditors to the Funds. McCurdy's reports on the Capital Value Fund's financial statements for the fiscal year ended June 30, 2003, the Allocation Fund's financial statements for the period ended June 30, 2003, and the Income Fund's financial statements for the period ended August 31, 2003, contained no adverse opinion or a disclaimer of opinion nor were they qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal periods stated above and through the term of the engagement with McCurdy, there were no disagreements with McCurdy on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of McCurdy, would have caused the Advisor to make reference to the subject matter of the disagreements in connection with its reports on the Funds' financial statements for such periods. Neither the Funds nor anyone on its behalf consulted with Cohen on items which (i) concerned the application of accounting principles to a specified transaction, either completed or proposed or the type of audit opinion that might be rendered on the Funds' financial statements as a result of such consultations or (ii) concerned the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K) or a reportable event (as described in paragraph (a)(1)(v) of said Item 304). 29 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To The Shareholders and Board of Trustees IMS Capital Value Fund IMS Strategic Allocation Fund IMS Strategic Income Fund (series' of AmeriPrime Funds) We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of the IMS Funds comprising the IMS Capital Value, IMS Strategic Allocation, and IMS Strategic Income Portfolios as of June 30, 2004, and the related statements of operations, the statements of changes in net assets and the financial highlights for the year and the period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The statements of changes in net assets for the year and period ended June 30, 2003 for the Capital Value and Strategic Allocation Funds and for the period ended August 31, 2003 for the Strategic Income Fund and the financial highlights for the periods indicated prior to June 30, 2004 were audited by McCurdy & Associates CPA's, Inc., whose audit practice was acquired by Cohen McCurdy, Ltd. McCurdy & Associates CPA's, Inc. expressed unqualified opinions on those statements. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of investments and cash held as of June 30, 2004 by correspondence with the Funds' 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 each of the portfolios constituting the IMS Funds as of June 30, 2004, the results of their operations, changes in their net assets and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Cohen McCurdy Westlake, Ohio 44145 August 25, 2004 Trustees and Officers (Unaudited) Independent Trustees - ----------------------------------------------------- ---------------------------------------------------------------- Name, Address*, (Date of Birth), Position with Fund Principal Occupation During Past 5 Years and Other Complex,** Term of Position with Trust Directorships - ----------------------------------------------------- ---------------------------------------------------------------- - ----------------------------------------------------- ---------------------------------------------------------------- Gary E. Hippenstiel (1947) Director, Vice President and Chief Investment Officer of Legacy Trust Company, N.A. since 1992. Trustee of AmeriPrime Trustee, 1995 to present Advisors Trust since July 2002 and Unified Series Trust since December 2002. Trustee of CCMI Funds since June 2003. Trustee of Access Variable Insurance Trust, since April 2003. - ----------------------------------------------------- ---------------------------------------------------------------- - ----------------------------------------------------- ---------------------------------------------------------------- Stephen A. Little (1946) President and founder, The Rose, Inc., a registered investment advisor, since April 1993. Trustee of AmeriPrime Advisors Trustee, December 2002 to present Trust since November 2002 and Unified Series Trust since December 2002. Trustee of CCMI Funds since June 2003. - ----------------------------------------------------- ---------------------------------------------------------------- - ----------------------------------------------------- ---------------------------------------------------------------- Daniel J. Condon (1950) President, 2004 to present, Vice President and General Manager, 1990 to 2003, International Crankshaft Inc., an automotive Trustee, December 2002 to present equipment manufacturing company, 1990 to present; Trustee, The Unified Funds, from 1994 to 2002; Trustee, Firstar Select Funds, a REIT mutual fund, from 1997 to 2000. Trustee of AmeriPrime Advisors Trust since November 2002 and Unified Series Trust since December 2002. Trustee of CCMI Funds since June 2003. - ----------------------------------------------------- ---------------------------------------------------------------- Interested Trustees and Principal Officers - --------------------------------------------------- ------------------------------------------------------------------ Name, Address*, (Date of Birth), Position with Principal Occupation During Past 5 Years Fund Complex,** Term of Position with Trust and Other Directorships - --------------------------------------------------- ------------------------------------------------------------------ - --------------------------------------------------- ------------------------------------------------------------------ Timothy L. Ashburn (1950)*** Employed by Unified Financial Services, Inc., Chairman of Unified Financial Services, Inc. 1989 to 2004, Chief Executive Trustee and Chairman, December 2002 to present Officer from 1989 to 1992 and 1994 to April 2002, and President President, December 2002 to July 2004 from November 1997 to April 2000. Trustee of AmeriPrime Advisors Asst. Secretary, December 2003 to present Trust since November 2002 and Unified Series Trust since October Secretary, June 2003 to December 2003 2002. Trustee of CCMI Funds since June 2003. - --------------------------------------------------- ------------------------------------------------------------------ - --------------------------------------------------- ------------------------------------------------------------------ Ronald C. Tritschler (1952)**** Chief Executive Officer, Director and legal counsel of The Webb Companies, a national real estate company, from 2001 to present; Trustee, December 2002 to present Executive Vice President and Director of The Webb Companies from 1990 to 2000; Director, First State Financial, from 1998 to present; Director, Vice President and legal counsel for The Traxx Companies, an owner and operator of convenience stores, from 1989 to present. Trustee of AmeriPrime Advisors Trust since November 2002 and Unified Series Trust since December 2002. Trustee of CCMI Funds since June 2003. - --------------------------------------------------- ------------------------------------------------------------------ - --------------------------------------------------- ------------------------------------------------------------------ Anthony J. Ghoston (1959) Executive Vice President of Unified Fund Services, Inc. since June 2004; Senior Vice President of Unified Fund Services, Inc. President, July 2004 to present April 2003 to June 2004; Senior Vice President and Chief Information Officer of Unified Financial Services since 1997. - --------------------------------------------------- ------------------------------------------------------------------ - --------------------------------------------------- ------------------------------------------------------------------ Thomas G. Napurano (1941) Chief Financial Officer and Executive Vice President of Unified Financial Services, Inc., the parent company of the Trust's Chief Financial Officer and Treasurer, October administrator and Distributor; Director, Unified Financial 2002 to present Services, Inc., from 1989 to March 2002. CFO of AmeriPrime Advisors Trust since October 2002 and Unified Series Trust since December 2002. CFO of CCMI Funds since June 2003. - --------------------------------------------------- ------------------------------------------------------------------ - --------------------------------------------------- ------------------------------------------------------------------ Carol Highsmith (1964) Vice President, Unified Fund Services, Inc., 2003 to present; Employed by Unified Fund Services, Inc. (November 1994 to Secretary, December 2003 to present present). Secretary of AmeriPrime Advisors Trust, Unified Series Asst. Secretary, October 2002 to December 2003 Trust, and CCMI Funds since December 2003. - --------------------------------------------------- ------------------------------------------------------------------
* The address for each of the trustees and officers is 431 N. Pennslyvania, Indianapolis, IN 46204. ** Fund Complex refers to AmeriPrime Advisors Trust, AmeriPrime Funds and Unified Series Trust. The Fund Complex consists of 29 series. *** 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 has an ownership interest in Unified Financial Services, Inc., the parent of the Distributor of certain series in the Fund Complex. **** Mr. Tritschler may be deemed to be an "interested person" of the Trust because he has an ownership interest in Unified Financial Services, Inc., the parent of the Distributor of certain series in the Fund Complex. 31 The Funds' Statement of Additional Information ("SAI") includes additional information about the trustees and is available, without charge, upon request. You may call toll-free (800) 934-5550 to request a copy of the SAI or to make shareholder inquiries. PROXY VOTING A description of the policies and procedures that each Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Funds voted those proxies during the twelve month period ended June 30, 2004, are available without charge, upon request by (1) calling the Funds at (800) 934-5550 and (2) from Fund documents filed with the Securities and Exchange Commission ("SEC") on the SEC's website at www.sec.gov. TRUSTEES Timothy L. Ashburn, Chairman Gary E. Hippenstiel Stephen A. Little Daniel J. Condon Ronald C. Tritschler OFFICERS Anthony J. Ghoston, President Thomas G. Napurano, Chief Financial Officer and Treasurer Carol J. Highsmith, Secretary INVESTMENT ADVISOR IMS Capital Management, Inc. 8995 S.E. Otty Road Portland, Oregon 97266 DISTRIBUTOR Unified Financial Securities, Inc. 431 N. Pennsylvania Street Indianapolis, Indiana 46204 INDEPENDENT ACCOUNTANTS Cohen McCurdy, Ltd. 826 Westpoint Pkwy., Suite 1250 Westlake, Ohio 44145 LEGAL COUNSEL Thompson Hine, LLP 312 Walnut St., Suite 1400 Cincinnati, Ohio 45202 CUSTODIAN U.S. Bank, N.A. 425 Walnut St. Cincinnati, Ohio 45202 ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT Unified Fund Services, Inc. 431 N. Pennsylvania Street Indianapolis, Indiana 46204 This report is intended only for the information of shareholders or those who have received the Funds' prospectus which contains information about each Fund's management fee and expenses. Please read the prospectus carefully before investing. Distributed by Unified Financial Securities, Inc. Member NASD/SIPC 32 Item 2. Code of Ethics. (a) As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. (b) For purposes of this item, "code of ethics" means written standards that are reasonably designed to deter wrongdoing and to promote: (1) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (2) Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant; (3) Compliance with applicable governmental laws, rules, and regulations; (4) The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and (5) Accountability for adherence to the code. (c) Amendments: During the period covered by the report, there have not been any amendments to the provisions of the code of ethics. (d) Waivers: During the period covered by the report, the registrant has not granted any express or implicit waivers from the provisions of the code of ethics. Item 3. Audit Committee Financial Expert. (a) The registrant's Board of Trustees has determined that the registrant does not have an audit committee financial expert. The committee members and the full Board considered the possibility of adding a member that would qualify as an expert. The audit committee determined that, although none of its members meet the technical definition of an audit committee financial expert, the committee has sufficient financial expertise to adequately perform its duties under the Audit Committee Charter without the addition of a qualified expert. Item 4. Principal Accountant Fees and Services. (a) Audit Fees FY 2003 $ 23,180 FY 2004 $ 22,400 (b) Audit-Related Fees Registrant FY 2003 $ 0 FY 2004 $ 0 Nature of the fees: (c) Tax Fees Registrant FY 2003 $ 3,202 FY 2004 $ 2,025 Nature of the fees: prepare tax returns (d) All Other Fees Registrant FY 2003 $ 1,995 FY 2004 $ 1,240 Nature of the fees: out of pockets, consents (e) (1) Audit Committee's Pre-Approval Policies The Audit Committee Charter requires the Audit Committee to be responsible for the selection, retention or termination of auditors and, in connection therewith, to (i) evaluate the proposed fees and other compensation, if any, to be paid to the auditors, (ii) evaluate the independence of the auditors, (iii) pre-approve all audit services and, when appropriate, any non-audit services provided by the independent auditors to the Trust, (iv) pre-approve, when appropriate, any non-audit services provided by the independent auditors to the Trust's investment adviser, or any entity controlling, controlled by, or under common control with the investment adviser and that provides ongoing services to the Trust if the engagement relates directly to the operations and financial reporting of the Trust, and (v) receive the auditors' specific representations as to their independence; (2) Percentages of Services Approved by the Audit Committee Registrant Audit-Related Fees: 100 % Tax Fees: 100 % All Other Fees: 100 % (f) During audit of registrant's financial statements for the most recent fiscal year, less than 50 percent of the hours expended on the principal accountant's engagement were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. (g) The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant: Registrant FY 2003 $ 1,995 FY 2004 $ 1,240 (h) Not applicable. The auditor performed no services for the registrant's investment adviser or any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant. Item 5. Audit Committee of Listed Companies. Not applicable. Item 6. Schedule of Investments. Not applicable - schedule filed with Item 1. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. Not applicable. Item 8. Purchases of Equity Securities by Closed-End Funds. Not applicable. Item 9. Submission of Matters to a Vote of Security Holders. The registrant has not adopted procedures by which shareholders may recommend nominees to the registrant's board of trustees. Item 10. Controls and Procedures. (a) Based on an evaluation of the registrant's disclosure controls and procedures as of June 24, 2004, the disclosure controls and procedures are reasonably designed to ensure that the information required in filings on Forms N-CSR is recorded, processed, summarized, and reported on a timely basis. (b) There were no significant changes in the registrant's internal control over financial reporting that occurred during the registrant's second fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 11. Exhibits. (a)(1) Code is filed herewith (a)(2) Certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 and required by Rule 30a-2under the Investment Company Act of 1940 are filed herewith. (a)(3) Not Applicable (b) Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is filed herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) AmeriPrime Funds By * /s/ Anthony Ghoston Anthony Ghoston, President Date September 8, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By * /s/ Anthony Ghoston Anthony Ghoston, President Date September 8, 2004 By * /s/ Thomas Napurano Thomas Napurano, Chief Financial Officer and Treasurer Date September 8, 2004 EX-32 2 ex99906cert.txt AMERIPRIME FUNDS EX-99.906CERT CERTIFICATION Timothy Ashburn, President, and Thomas Napurano, Chief Financial Officer and Treasurer of AmeriPrime Funds (the "Registrant"), each certify to the best of his or her knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended June 30, 2004 (the "Form N-CSR") fully complies with the requirements of Sections 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. President Chief Financial Officer and Treasurer AmeriPrime Funds AmeriPrime Funds /s/ Anthony Ghoston /s/ Thomas Napurano - ------------------------------------ ------------------------------------- Anthony Ghoston Thomas Napurano Date: September 8, 2004 Date: September 8, 2004 ------------------------------- ------------------------------ A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to AmeriPrime Funds and will be retained by AmeriPrime Funds and furnished to the Securities and Exchange Commission (the "Commission") or its staff upon request. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Form N-CSR filed with the Commission. EX-31 3 ex99cert.txt AMERIPRIME FUNDS Exhibit 99.CERT CERTIFICATIONS I, Anthony Ghoston, certify that: 1. I have reviewed this report on Form N-CSR of AmeriPrime Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 8, 2004 ------------------------------- /s/ Anthony Ghoston Anthony Ghoston, President I, Thomas Napurano, certify that: 1. I have reviewed this report on Form N-CSR of AmeriPrime Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 8, 2004 ------------------------------- /s/ Thomas Napurano Thomas Napurano, Chief Financial Officer and Treasurer EX-99.CODE ETH 4 codeeth.txt AMERIPRIME FUNDS AMERIPRIME ADVISORS TRUST AMERIPRIME FUNDS UNIFIED SERIES TRUST CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS I. Covered Officers/Purpose of the Code This code of ethics (this "Code") applies to the Principal Executive Officer and Principal Financial Officer and those serving similar functions (the "Covered Officers" each of whom is set forth in Exhibit A) of AmeriPrime Advisors Trust, AmeriPrime Funds and Unified Series Trust (each a "Company") for the purpose of promoting: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely and understandable disclosure in reports and documents that a Company files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by a Company; o compliance with applicable laws and governmental rules and regulations; o the prompt internal reporting of violations of this Code to an appropriate person or persons identified in this Code; and o accountability for adherence to this Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interests interfere with the interests of, or the Covered Officer's service to, a Company. For example, a conflict of interest would arise if a Covered Officer, or a member of the Covered Officer's family, receives improper personal benefits as a result of the Covered Officer's position with the Company. Certain conflicts of interest arise out of the relationships between Covered Officers and a Company and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with a Company because of their status as "affiliated persons" of the Company. This Code does not, and is not intended to, repeat or replace any compliance programs and procedures of any Company or the investment adviser designed to prevent, or identify and correct, violations of the Investment Company Act and the Investment Advisers Act. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between a Company and an investment adviser or the administrator of which a Covered Officer is also an officer or employee. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties, whether formally for a Company or the administrator, be involved in establishing policies and implementing decisions that will have different effects on the adviser or the administrator and the Company. The participation of the Covered Officers in such activities is inherent in the contractual relationship between a Company and the administrator and is consistent with the performance by the Covered Officers of their duties as officers of the Company. Thus, if performed in conformity with the provisions of the Investment Company Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by each Company's Board of Trustees ("Board") that the Covered Officers may also be officers or employees of one or more investment companies covered by other codes. Other conflicts of interest are covered by this Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under this Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of any Company. Each Covered Officer must: o not use personal influence or personal relationships improperly to influence investment decisions or financial reporting by a Company whereby the Covered Officer would benefit personally to the detriment of the Company; o not cause a Company to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Company; o not use material non-public knowledge of portfolio transactions made or contemplated for a Company to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; o report at least annually any affiliations or other relationships related to conflicts of interest that the Company's Trustees and Officers Questionnaire covers. The Secretary of each Company shall be designated the Compliance Officer of the Company, solely for purposes of this Code of Ethics. There are some conflict of interest situations that should always be discussed with the Compliance Officer of a Company, if material. Examples of these include: o service as a director on the board of any public company; o the receipt of any non-nominal gifts; o the receipt of any entertainment from any company with which a Company has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any questions of impropriety; o any ownership interest in, or any consulting or employment relationship with, any Company's service providers, other than its principal underwriter, administrator or any affiliated person thereof; and o a direct or indirect financial interest in commissions, transaction charges, soft dollar credits or spreads paid by a Company for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. Disclosure and Compliance o Each Covered Officer should familiarize himself with the disclosure requirements generally applicable to each Company. o Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about a Company to others, whether within or outside the Company, including to the Company's directors and auditors, and to governmental regulators and self-regulatory organizations. o Each Covered Officer should, to the extent appropriate within the Covered Officer's area of responsibility, consult with other officers and employees of each Company and of the advisers or the administrator with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Company files with, or submits to, the SEC and in other public communications made by the Company. o It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. Reporting and Accountability Each Covered Officer must: o upon adoption of this Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that the Covered Officer has received, read, and understands this Code; o annually thereafter affirm to the Board that the Covered Officer has complied with the requirements of this Code; o not retaliate against any other Covered Officer or any employee of a Company or their affiliated persons for reports of potential violations that are made in good faith; and o notify the Compliance Officer promptly if the Covered Officer knows of any violation of this Code. Failure to do so is itself a violation of this Code. The Compliance Officer is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, any approvals or waivers sought by a Covered Officer will be considered by the Audit Committee (the "Committee"), which will make recommendations to the Board. Each Company will follow these procedures in investigating and enforcing this Code: o the Compliance Officer for the Company will take all appropriate action to investigate any potential violations reported to the Compliance Officer; o the Compliance Officer will review with the outside legal counsel to the Company the findings and conclusions of such investigation; o if, after such investigation and review, the Compliance Officer believes that no violation has occurred, the Compliance Officer is not required to take any further action; o any matter that the Compliance Officer believes is a violation will be reported to the Committee; o if the Committee concurs that a violation has occurred, it will inform and make a recommendation to the Board, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures (including changes to this Code); notification of the violation to appropriate personnel of the investment adviser or the administrator or its board; or a recommendation to take disciplinary action against the Covered Officer, which may include, without limitation, dismissal; o the Board will be responsible for granting waivers, as appropriate; and o any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules on Form N-CSR. V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by each Company for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Each Company's and its investment advisers' and underwriters codes of ethics under Rule 17j-1 under the Investment Company Act are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. Amendments Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Board, including a majority of independent trustees. VII. Confidentiality To the extent possible, all records, reports and other information prepared, maintained or acquired pursuant to this Code will be treated as confidential, it being understood that it may be necessary or advisable, that certain matters be disclosed to third parties (e.g., to the board of directors or officers of the adviser or the administrator). VIII. Internal Use This Code is intended solely for the internal use by each Company and does not constitute an admission, by or on behalf of the Company, as to any fact, circumstance, or legal conclusion. Adopted July 21, 2003 437831.4 Exhibit A Persons Covered by this Code of Ethics Timothy Ashburn Thomas Napurano Anthony Ghoston Carol Highsmith Exhibit B AMERIPRIME ADVISORS TRUST AMERIPRIME FUNDS UNIFIED SERIES TRUST Covered Officer Affirmation of Understanding In accordance with Section IV of the Code of Ethics for Principal Executive and Senior Financial Officers (the "Code"), the undersigned Covered Officer of the Company (as defined in the Code) hereby affirms to the Board that the Covered Officer has received, read, and understands the Code. Date: ___________________ _________________________________________ Covered Officer Exhibit C AMERIPRIME ADVISORS TRUST AMERIPRIME FUNDS UNIFIED SERIES TRUST Covered Officer Annual Affirmation For the period July 1, 2003 to May 31, 2004 In accordance with Section IV of the Code of Ethics for Principal Executive and Senior Financial Officers (the "Code"), the undersigned Covered Officer of the Company (as defined in the Code) hereby affirms to the Board that the Covered Officer, at all times during the period for which this affirmation is given, has complied with each of the requirements of the Code. Date: ___________________ _________________________________________ Covered Officer -----END PRIVACY-ENHANCED MESSAGE-----