Dear Shareholders:
Investment Results - Fiscal Year Ended October 1998
The AAM Equity Fund (the "Fund") ended its first October fiscal year with a
negative 5.7% total return for four months since the Fund's inception.
<TABLE>
<S> <C> <C> <C> <C> <C>
30-Jun-98 3rd Quarter 1998 Since Inception
AAM Equity Fund 10000 8,710.00 9,430.00
S&P 500 10000 9,010.00 9,749.00
Dow Jones 10000 8,800.00 9,660.00
S&P MidCap 400 10000 8,550.00 9,320.00
Blended Benchmark 10000 8,864.00 9,634.00
AAMEquity Fund S&P 500 Index Dow Jones Index S&P Mid-Cap 400 Index BlendedBenchmark
Quarter Ending 9/30/98 -12.90% -9.90% -12.00% -14.50% -11.36%
Since Inception -5.70% -2.51% -3.40% -6.80% -3.66%
</TABLE>
Investment results since inception (not annualized):
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------------- ---------------- ------------- ------------- ------------------ -----------------
Comparative AAM S&P 500 Dow Jones S&P Mid-Cap 400 Blended
Investment Returns12 Equity Fund Index3 Indexc Indexc Benchmark4
- ------------------------------- ---------------- ------------- ------------- ------------------ -----------------
- ------------------------------- ---------------- ------------- ------------- ------------------ -----------------
Quarter Ending 9/30/98 -12.90% -9.90% -12.00% -14.50% -11.36%
- ------------------------------- ---------------- ------------- ------------- ------------------ -----------------
- ------------------------------- ---------------- ------------- ------------- ------------------ -----------------
Since Inception5 - 5.70% -2.51% - 3..40% - 6.80% - 3.66%
- ------------------------------- ---------------- ------------- ------------- ------------------ -----------------
</TABLE>
<PAGE>
From inception on June 30, 1998, the Fund has accumulated $2,851,928 in net
assets during what has been a difficult market environment.
Investment Approach
To remind our shareholders, the AAM Equity Fund's investment approach is to
achieve long-term growth of capital by investing in high quality large and
mid-cap U.S. companies. We select companies which are leaders in their various
industries which we think provide the greatest potential return over an 18 month
to two year time horizon.
Commentary and Outlook
As everyone knows by now, the stock market, after having a tremendous upward
spiral in the first six months of 1998, lost about 75% of that gain in the 3rd
quarter of 1998. Since the end of September 1998, the market has recovered some
of the major losses from earlier this summer, thanks in part to an accommodating
Federal Reserve policy. The underlying problem has been fears of a growing
global economic slowdown and the uncertainty as to what effect this will have on
U.S. corporate profit growth.
As has been the case during all of 1998, the Dow Jones and the S&P 500 returns
tell only a small part of the story. The downward benchmark returns for the S&P
500, Dow Jones, and S&P Mid-Cap 400 indices for the 3rd quarter are shown above.
During that same period, the average stock fund was down 15%. To make matters
actually worse, the average stock is down much more than the indices indicate,
with many stocks off over 50%. These statistics are grim, but there is a silver
lining in the cloud. Behind these numbers lie great opportunities for investment
in some of the world's best companies at prices significantly lower than they
were just three or four months ago. AAM remains fully invested and, on market
weakness, will look to add to our positions in these superb companies.
Our expectation over the next few quarters is for financial markets to continue
to experience abnormal volatility and for there to be a major flight to quality.
The economically strong nations of the world will pull together to develop a
plan to protect themselves from creeping global economic weakness. This will
take time and may test our fortitude, but we remain convinced that the companies
we hold are fine future prospects.
I will always remember the first investment lesson taught to me by Charles
Robinson in Nashville, Tennessee...
"Markets don't always go up, but great companies held through tough times
will make you a wise investor."
Sincerely,
Knox H. Fuqua
President and Chief Investment Officer
<PAGE>
From June 30, 1998.
AAM Equity Fund
Schedule of Investments - October 31, 1998
Common Stock - 98.0% Shares Value
Aerospace & Defence - 4.7%
Allied Signal Inc. 1,025 $ 39,911
Lockheed Martin Corp. 500 55,687
St. Paul Companies 1,125 37,266
---------------
132,864
---------------
Automobiles - 1.5%
Ford Motor Company 800 43,400
---------------
Banks - 10.1%
BB&T 1,500 53,532
Capital One Financial Corp. 375 38,156
CCB Financial Corp. 900 47,362
Citigroup 1,500 70,595
Crestar Financial Corp. 500 32,938
Wachovia Corp 500 45,437
---------------
288,020
---------------
Chemicals - 3.3%
Air Products & Chemicals Inc. 1,400 52,850
Du Pont (E.I) 725 41,688
---------------
---------------
94,538
---------------
Communications - 1.7%
Media General, Inc. Class A 1,075 48,106
---------------
Computer Components - 1.6%
Intel Corp. 500 44,594
---------------
Computer Systems - 3.9%
Cisco Systems, Inc. (a) 825 51,975
Hewlett-Packard Co. 1,000 60,188
---------------
---------------
112,163
---------------
Data Telecommunications - 1.9%
SBC Communications 1,175 54,418
---------------
Diversified Conglomerates - 1.5%
General Electric Co. 500 43,750
---------------
Drugs & Healthcare - 8.5%
Amgen, Inc. 600 47,138
Bristol Myers Squibb 500 55,281
Johnson & Johnson 500 40,750
Merck & Co., Inc. 325 43,956
Schering-Plough & Corp. 525 54,009
---------------
---------------
241,134
---------------
Electronics - 3.3%
Motorola, Inc. 725 37,700
Royal Philips Electronics 1,000 54,875
---------------
---------------
92,575
---------------
AAM Equity Fund
Schedule of Investments - October 31, 1998 - continued
Common Stock - continued Shares Value
Entertainment - 1.3%
Disney (Walt) & Co. 1,400 $ 37,713
---------------
Food & Beverage - 5.4%
Anheuser Busch Cos. 975 57,952
Coca Cola & Company 700 47,337
Sysco Corp. 1,800 48,488
---------------
---------------
153,777
---------------
Household Products - 3.0%
American Home Products Corp. 825 40,219
Gillette Co. 1,000 44,938
---------------
85,157
---------------
Insurance - 3.4%
American International 700 59,675
Markel Corp. (a) 250 37,156
---------------
---------------
96,831
---------------
Medical Products - 2.0%
Owens & Minor 3,575 56,753
---------------
Manufacturing - 7.4%
Chemfirst 2,400 46,500
Chesapeake Corp. 1,500 52,500
Deere & Co. 1,300 45,987
International Flavor & Fragrances 875 32,758
Mattel, Inc. 950 34,081
---------------
211,826
---------------
Mining & Building Materials - 4.8%
Aluminum Company of America 600 47,550
Cleveland Cliffs, Inc. 950 37,703
Martin Marietta Materials 1,075 52,743
---------------
---------------
137,996
---------------
Mutual Fund Services - 0.7%
Pioneer Group, Inc. (a) 1,475 21,112
---------------
Oil Field Services - 0.9%
Halliburton Co. 700 25,156
---------------
Oil & Natural Gas - 9.6%
Amoco Corp. 925 51,916
Atlantic Richfield 700 48,213
Chevron Corp. 500 40,750
Enron Corp. 700 36,925
Schlumberger Ltd. 900 47,250
Valero Energy Corp. 2,000 50,000
---------------
---------------
275,054
---------------
AAM Equity Fund
Schedule of Investments - October 31, 1998 - continued
Common Stock - continued Shares Value
Other Consumer Goods - 2.9%
Cracker Barrel 1,500 $ 38,813
Tredegar Industries, Inc. 2,000 45,126
---------------
---------------
83,939
---------------
Real Estate Investment Trusts - 3.8%
Federal Realty Investments 1,600 36,200
MGI Properties 1,350 39,489
Union Dominion Realty 3,000 33,376
---------------
109,065
---------------
Retail - 5.6%
Circuit City Stores, Inc. 1,500 54,282
Saks Holdings, Inc. (a) 2,000 45,500
Walgreen Co. 1,200 58,426
---------------
---------------
158,208
---------------
Transportation - 5.2%
CSX Corp. 1,025 40,231
Norfolk Southern 1,550 51,054
Tidewater, Inc. 1,300 56,626
---------------
---------------
147,911
---------------
Total Common Stock - (Cost $2,897,292) 2,796,060
---------------
Money Market Securities - 0.9% Principal Amount Value
Star Treasury, 4.96% 11/2/98 (Cost $24,602) $ 24,602 24,602
---------------
TOTAL INVESTMENTS - (Cost $2,921,894) - 98.9% 2,820,662
---------------
Other assets less liabilities - 1.1% 31,266
---------------
Total Net Assets - 100.0% $ 2,851,928
===============
(a) non-income producing
AAM Equity Fund
Statement of Assets and Liabilities
October 31, 1998
Assets
Investment in securities, at value (cost $2,921,894) $ 2,820,662
Receivables:
Dividends 2,268
Interest 480
From advisor for organizational costs 2,106
Deferred organizational costs 28,890
-------------------
Total assets 2,854,406
Liabilities
Payables:
Accrued advisory fee $ 2,478
------------------
Total liabilities 2,478
--------------------
Net Assets $ 2,851,928
====================
Net Assets consist of:
Paid in capital $ 2,983,795
Accumulated undistributed net investment income 7,205
Accumulated undistributed net realized gain (37,840)
Net unrealized appreciation on investments (101,232)
--------------------
Net Assets, for 302,471 shares $ 2,851,928
====================
Net Asset Value
Net Assets
Offering price and redemption price per share ($2,851,928/302,471)
$ 9.43
====================
<PAGE>
AAM Equity Fund
Statement of Operations for the period June 30, 1998 (Commencement of
Operations) to October 31, 1998
Investment Income
Dividend Income $ 13,063
Interest Income 3,171
-------------------
Total Income 16,234
Expenses
Investment advisory fee $ 8,847
Organizational expenses 2,105
Trustee's fees 182
-------------------
Total operating expenses 11,134
Reimbursed expenses (2,105)
-------------------
Net operating expenses 9,029
-------------------
Net Investment Income 7,205
-------------------
Realized & Unrealized Gain (Loss)
Net realized gain (loss) on
investment securities (37,840)
Change in net unrealized depreciation
of investment securities (101,232)
----------------
Net Gain (Loss) (139,072)
-------------------
Net increase (decrease) in net assets resulting from operations $ (131,867)
===================
<PAGE>
AAM Equity Fund
Statement of Changes in Net Assets
Period ended
Increase/(Decrease) in Net Assets October 31, 1998 (a)
Operations
Net investment income (loss) $ 7,205
Net realized gain (loss) (37,840)
Change in net unrealized appreciation (depreciation) (101,232)
----------------
Net Decrease in net assets resulting from operations (131,867)
----------------
Net proceeds from sale of shares 2,990,242
Shares redeemed (6,447)
----------------
Net increase in net assets resulting
from share transactions 2,983,795
----------------
Total increase in net assets 2,851,928
Net Assets
Beginning of period -
----------------
End of period [including undistributed net investment
income of $7,205 ] $ 2,851,928
================
(a) June 30, 1998 (commencement of operations) to October 31, 1998.
AAM Equity Fund
Financial Highlights
Period ended
October 31, 1998 (b)
Selected Per Share Data
Net asset value, beginning of period $10.00
--------------
Income from investment operations
Net investment income (loss) 0.03
Net realized and unrealized gain (loss) (0.60)
--------------
Total from investment operations (0.57)
Net asset value, end of period $9.43
==============
Total Return (5.%0)
Ratios and Supplemental Data
Net assets, end of period (000) $2,852
Ratio of expenses to average net assets
before reimbursement 1.(a)
Ratio of expenses to average net assets
after reimbursement 1.(a)
Ratio of net investment income to
average net assets before reimbursement 0.(a)
Ratio of net investment income to
average net assets after reimbursement 0.(a)
Portfolio turnover rate 14.41%
(a) Annualized
(b) June 30, 1998 (commencement of operations) to October 31, 1998.
AAM EQUITY FUND
Notes to Financial Statements
October 31, 1998
NOTE 1. ORGANIZATION
AAM Equity Fund (the "Fund") was organized as a series of the AmeriPrime
Funds, an Ohio business trust (the "Trust), on April 8, 1998 and commenced
operations on June 30, 1998. The Fund is registered under the Investment Company
Act of 1940, as amended, as a diversified open-end management investment company
whose investment objective is to provide long-term capital appreciation. The
Trust Agreement permits the Trustees to issue an unlimited number of shares of
beneficial interest of separate series without par value.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements.
Securities Valuations- Securities which are traded on any exchange or on
the NASDAQ over-the-counter market are valued at the last quoted sale price.
Lacking a last sale price, a security is valued at its last bid price except
when, in the Adviser's opinion, the last bid price does not accurately reflect
the current value of the security. All other securities for which
over-the-counter market quotations are readily available are valued at their
last bid price. When market quotations are not readily available, and the
Adviser determines the last bid price does not accurately reflect the current
value or when restricted securities are being valued, such securities are valued
as determined in good faith by the Adviser, in conformity with guidelines
adopted by and subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Adviser believes such prices accurately reflect the fair market value of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith by the Adviser,
subject to review of the Board of Trustees. Short-term investments in fixed
income securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
<PAGE>
AAM EQUITY FUND
Notes to Financial Statements
October 31, 1998
Federal Income Taxes- The Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.
Dividends and Distributions- The Fund intends to distribute substantially all of
its net investment income as dividends to its shareholders on an annual basis.
The Fund intends to distribute its net long-term capital gains and its net
short-term capital gains at least once a year.
Other- The Fund follows industry practice and records security transactions on
the trade date. The specific identification method is used for determining gains
or losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrual
basis. Discounts and premiums on securities purchased are amortized over the
life of the respective securities.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains Appalachian Asset Management, Inc. (the "Adviser") to
manage the Fund's investments. The adviser is controlled by its President, Knox
H. Fuqua. Mr. Fuqua is primarily responsible for the day to day management of
the Fund's portfolio.
Under the terms of the management agreement, (the "Agreement"), the Adviser
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of the Fund except brokerage commission, taxes,
interest, fees and expenses of non-interested person trustees, and extraordinary
expenses. As compensation for its management services and agreement to pay the
Fund's expenses, the Fund is obligated to pay the Adviser a fee of 1.15% of the
average daily net assets of the Fund. It should be noted that most investment
companies pay their own operating expenses directly, while the Fund's expenses,
except those specified above, are paid by the Adviser. For the period from June
30, 1998 (commencement of operations) through October 31, 1998, the Adviser
received a fee of $8,847 from the Fund.
The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator")
to manage the Funds business affairs and provide the Fund with administrative
services, including all regulatory reporting and necessary office equipment and
personnel. For the period from June 30, 1998 (commencement of operations) to
October 31, 1998, the Administrator received fees of $10,000 from the Adviser
for administrative services provided to the Fund.
AAM EQUITY FUND
Notes to Financial Statements
October 31, 1998
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued
The Fund retains AmeriPrime Financial Securities, Inc. ("the Distributor") to
act as the principal distributor of the Fund's shares. There were no payments
made to the Distributor from June 30, 1998 (commencement of operations) to
October 31, 1998. Certain members of management of the Administrator and the
Distributor are also members of management of the AmeriPrime Trust.
NOTE 4. CAPITAL SHARE TRANSACTIONS
As of October 31, 1998, there was an unlimited number of no par value shares
of capital stock authorized for the Fund. Paid in capital at October 31, 1998
was $2,983,795.
Transactions in capital stock were as follows: For the period ended October
31:
<PAGE>
Shares Dollars
Shares sold 303,178 $2,990,242
Shares redeemed (707) (6,447)
--------- -------------
302,471 $2,983,795
<PAGE>
NOTE 5. INVESTMENTS
For the period from June 30, 1998 through October 31, 1998, purchases and
sales of investment securities, other than short-term investments, aggregated
$3,140,557 and $205,425, respectively. As of October 31, 1998, the gross
unrealized appreciation for all securities totaled $134,590 and the gross
unrealized depreciation for all securities totaled $235,822 for a net unrealized
depreciation of $101,232. The aggregate cost of securities for federal income
tax purposes at October 31, 1998 was $2,921,894.
<PAGE>
AAM EQUITY FUND
Notes to Financial Statements
October 31, 1998
NOTE 6. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 7. Year 2000 Issue
Like other mutual funds, financial and business organizations and individuals
around the world, the fund could be adversely affected if the computer systems
used by the Adviser, Administrator or Servicers do not properly process and
calculate date-related information and data from and after January 1, 2000. This
is commonly known as the "Year 2000 Issue." The Adviser and Administrator have
taken steps that they believe are reasonably designed to address the Year 2000
Issue with respect to computer systems that are used and to obtain reasonable
assurances that comparable steps are being taken by each of the Fund's major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and Board of Trustees
AAM Equity Fund
We have audited the accompanying statement of assets and liabili-
ties of AAM Equity Fund (a member of the Ameriprime Fund series), including the
schedule of portfolio investments, as of October 31, 1998, and the related
statement of operations for the year then ended, and the statement of changes in
net assets, and financial highlights for the period from June 30, 1998
(commencement of operations) to October 31, 1998 in the period then ended. These
financial statements and financial highlights are the responsi-
bility of the Fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held by
the custodian as of October 31, 1998, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AAM
Equity Fund as of October 31, 1998, the results of its operations for the year
then ended, and the changes in its net assets, and the financial highlights for
the period from June 30, 1998 (commencement of operations) to October 31, 1998
in the period then ended, in conformity with generally accepted accounting
principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
November 9, 1998
<PAGE>
AIT Vision US Equity Fund
Investment Results - For the Period Ended October 31, 1998
Dear Fellow Shareholders:
As of the period ended October 31, 1998, the AIT Vision Fund appreciated by
12.9% during the last twelve months and declined by -2.7% over last six months.
The Fund's investment results are compared to the unmanaged S&P 500 and Russell
3000 indices in the table and chart below. The Fund uses the Russell 3000 as its
selection universe and performance benchmark.
- ------------------------------------------------- -- ---- ----- ----------------
Returns for the Periods Ended 10/31/98
- ------------------------------------------------- -- ---- ----- ----------------
Since Inception Annualized
Fund/Index 6 Months 1 Year 12/28/95 Since Inception
- ---------- -------- ------ -------- ---------------
AIT Vision Fund -2.7% 12.9% 78.8% 22.8%
S&P 500 -0.4% 22.0% 88.8% 25.1%
Russell 3000 -3.7% 16.5% 77.9% 22.5%
- --------------------- ---- --------------- ------------------ ------------------
Comparison of the Change in Value of a $10,000 Investment in the AIT Vision
Fund, the Unmanaged S&P 500 Index, and the Unmanaged Russell 3000 Index <TABLE>
<S> <C> <C> <C>
AIT S&P 500 FR 3000
AIT Vision Fund $17,881 S&P 500 $18,881 Russell 3000 $17,786
12/28/95 $10,000 $10,000 $10,000
1/31/96 $10,070 $10,387 $10,365
2/29/96 $10,513 $10,484 $10,518
3/31/96 $10,482 $10,584 $10,624
4/30/96 $11,177 $10,740 $10,826
5/31/96 $12,063 $11,017 $11,103
6/30/96 $11,973 $11,059 $11,068
7/31/96 $11,247 $10,570 $10,488
8/31/96 $11,690 $10,793 $10,806
9/30/96 $12,395 $11,401 $11,394
10/31/96 $12,708 $11,715 $11,602
11/30/96 $13,292 $12,601 $12,421
12/31/96 $12,899 $12,351 $12,271
1/31/97 $13,508 $13,123 $12,950
2/28/97 $13,427 $13,225 $12,964
3/31/97 $12,610 $12,682 $12,377
4/30/97 $13,208 $13,439 $12,987
5/31/97 $14,174 $14,257 $13,874
6/30/97 $14,426 $14,896 $14,451
7/31/97 $16,184 $16,081 $15,583
8/31/97 $15,391 $15,180 $14,951
9/30/97 $16,323 $16,011 $15,799
10/31/97 $15,839 $15,477 $15,268
11/30/97 $16,277 $16,193 $15,853
12/31/97 $16,648 $16,472 $16,171
1/31/98 $16,385 $16,654 $16,255
2/28/98 $17,289 $17,855 $17,417
3/31/98 $18,217 $18,769 $18,281
4/30/98 $18,381 $18,958 $18,461
5/31/98 $18,093 $18,632 $18,005
6/30/98 $18,645 $19,389 $18,614
7/31/98 $18,244 $19,183 $18,276
8/31/98 $15,695 $16,409 $15,476
9/30/98 $16,976 $17,460 $16,531
10/31/98 $17,881 $18,881 $17,786
</TABLE>
This chart shows the value of a hypothetical initial investment of $10,000 in
the Fund, the S&P 500 Index, and the Russell 3000 Index on December 28, 1995 and
held through October 31, 1998. The S&P 500 Index and the Russell 3000 Index are
widely recognized unmanaged indices of common stock prices. Performance figures
include the change in value of the stocks in the indices, reinvestment of
dividends, and are not annualized. The index returns do not reflect expenses,
which have been deducted from the Fund's return.
THE FUND'S RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS.
<PAGE>
Portfolio Overview
The Fund's solid 12.9% return over the past year was generated in an environment
of increasing stock market volatility and growing investor nervousness. Some of
the investment policies that served the Fund well during the last twelve months
include emphasizing stocks with attractive price/earnings ratios coupled with
our holdings from the technology, airline, and drug industries. However, a
continuation of the market's very narrow leadership by a relatively few very
large companies significantly limited any benefits the Fund derives from its
broad Russell 3000 selection universe. Detailed below are the economic sector
weightings and the largest holdings for the Fund as of October 31, 1998.
- -------------------------------------- ------------ --------------
Economic Sector Weightings
- -------------------------------------- ------------ --------------
Percent of
Net Assets
10/31/98
Basic Materials 0.0%
Consumer Durables 4.6%
Capital Goods 1.5%
Consumer Nondurables 5.5%
Energy 1.4%
Financial Services 12.9%
Health Care 16.4%
Retail Trade 9.7%
Services 7.9%
Technology 18.2%
Telecommunication 10.2%
Transportation 4.2%
Utilities 6.1%
Cash 1.4%
-- ----
Total 100.0%
- ------------------------------------ -------------- --------------
- ----------------------------------------- --------- --------------
Ten Largest Holdings
- ----------------------------------------- --------- --------------
Percent of
Net Assets
10/31/98
International Business Machines 3.5%
Microsoft Corp. 3.2%
PECO Energy Co. 2.6%
BellSouth Corp. 2.6%
Schering Plough Corp. 2.4%
Allergan Inc. 2.4%
Bell Atlantic Corp. 2.4%
Bristol Myers Squibb Co. 2.4%
Amgen Inc. 2.4%
Tricon Global Restaurants Inc. 2.3%
-- ----
Total 26.2%
- ----------------------------------------- --------- --------------
Market Review
The phenomenal strength and stability of US economic growth since the early
1980's left some economists wondering about the demise of the business cycle and
allowed domestic investors to enjoy equity returns that were far above-average.
Not only did equity returns run at a rate nearly double historical standards,
but also the returns for much of the 1990's occurred with historically low
volatility. Therefore, stock market valuation measures were allowed to rise to
historical highs as investors greatly reduced their perceptions of the risk of
US equity investments.
Late last year, a wildfire of global economic instability began in the Pacific
Basin, spread through Russia, and moved on to threaten the emerging countries of
Latin America. The currencies of these countries were challenged, or even
devalued, and an investor flight to safety led to tremendous capital inflows
into the safe haven of the US treasury market. Such extreme global economic
stress and the sudden shifts in capital flows assisted in the leveraged
implosion of Long Term Capital, a large high profile hedge fund manager. This
development, in turn, threatened the financial integrity of many US money center
banks and security brokers by confronting them with the latest unforeseen
meltdown of their derivative-related positions. Very quickly the excesses built
up within the financial markets during the last decade were being wrung out and
all investors were quickly reminded of the potential risks associated with their
equity investments.
Just as the financial prospects appeared most bleak, the Japanese parliament
approved a plan for aiding their banking system, emerging market economies
appeared to show signs of stabilization, the US Congress approved a contribution
to the IMF rescue fund, and then, most importantly, the Fed quickly lowered
short term interest rates twice with European countries following suit. The US
stock market responded by building a base throughout the month of September 1998
and promptly rallied to retrace much of its losses from the July 1998 high.
Within the US equity market over the last year, those companies that have been
able to grow their earnings more robustly despite an environment of generally
slowing profit growth have been rewarded. The returns for growth stocks
generally exceeded the returns of value stocks during this period. Smaller
company stocks continued to significantly underperform their larger company
counterparts despite rather compelling relative valuations. Investors were
willing to pay a premium for being involved with the relatively more liquid
investments of popular US "franchise" companies. All of these relative
performance distinctions reflect investment choices that were based on more,
rather than less, risk aversion.
In such a dynamic financial environment, the disciplined quantitative process
employed within the Fund helps to ensure consistent implementation of our
rigorous investment approach. The stock selection process used within the Fund
was recently awarded a patent by the US Patent and Trademark Office, the first
of its kind ever awarded. We believe our comprehensive investment approach
allows us to uniquely discover the financial linkages between macro conditions,
fundamental measures, and inherent price momentum.
While financial markets are always complex, we look forward to the constant
challenges of adding value to your investments within the US equity market.
Thank you for your trust and continued confidence.
Respectfully,
Douglas W. Case, CFA
Chief Investment Officer
Advanced Investment Technology, Inc.
<TABLE>
<CAPTION>
AIT Vision U.S. Equity Portfolio
Schedule of Investments - October 31, 1998
<S> <C> <C>
Common Stocks - 98.6% Shares Value
Apparel - 1.8% %
TJX Companies, Inc. 4,400 $ 83,325
----------------
Auto Manufacturers - 3.4%
Chrysler Corp. 1,500 72,187
Ford Motor Company 1,600 86,800
----------------
----------------
158,987
----------------
Banks - 2.4%
Mellon Bank Corp. 800 48,100
PNC Bank Corp. 1,300 65,000
----------------
113,100
----------------
Building - 1.2%
Centex Corp. 1,600 53,600
----------------
Business Equipment - 1.5%
Xerox Corp. 700 67,813
----------------
Capital Goods - 1.5%
Ingersoll Rand Co. 1,400 70,700
----------------
Communications & Communications Equipment - 10.2%
AT&T Corp. 1,700 105,825
Alltel Corp. 1,402 65,631
Bell Atlantic Corp. 2,100 111,563
Bell South Corp. 1,500 119,719
GTE Corp. (a) 1,200 70,425
----------------
473,163
----------------
Computers, Peripherals & Software- 16.2%
BMC Software, Inc. (a) 1,500 72,094
Cisco Systems, Inc. (a) 1,350 85,050
Dell Computer (a) 1,600 105,000
International Business Machines Corp. 1,100 163,280
Microsoft Corp. (a) 1,400 148,225
Sterling Software (a) 2,300 60,231
Synopsys, Inc. (a) 1,300 58,825
Tandy Corp. 1,200 59,475
----------------
752,180
----------------
Drugs - 10.3%
Amgen, Inc. (a) 1,400 109,988
Bristol Myers Squibb 1,000 110,563
Pfizer, Inc. 600 64,387
Schering-Plough Corp. 1,100 113,163
Watson Phamaceuticals, Inc. (a) 1,400 77,875
----------------
----------------
475,976
----------------
Electrical & Electronics - 2.6%
Peco Energy Co. 3,100 119,931
----------------
AIT Vision U.S. Equity Portfolio
Schedule of Investments - October 31, 1998
Shares Value
Common Stocks - continued
Energy - Oil & Gas - 1.4%
Chevron Corp. 800 $ 65,200
----------------
Financial Services - 4.3%
Edwards A.G. 1,600 55,300
Fannie Mae 1,100 77,894
Fleet Financial Group, Inc. 1,600 63,900
----------------
197,094
----------------
Food - 6.9%
IBP, Inc. 3,100 83,894
Quaker Oats Co. 1,700 100,406
Safeway, Inc. (a) 1,400 66,937
Tyson Foods Inc. Class A 3,000 69,000
----------------
----------------
320,237
----------------
Insurance - 5.0%
Allstate Corp. 1,400 60,288
Cigna Corp. 900 65,644
Protective Life Corp. 2,800 103,775
----------------
229,707
----------------
Medical Supplies - 4.1%
Allergan Inc. 1,800 112,387
Becton Dickinson and Co. 1,800 75,825
----------------
----------------
188,212
----------------
Office Equipment - 1.8%
Lexmark International Group (a) 1,200 83,925
----------------
Oil & Gas Services - 1.8%
Coastal Corp. 2,400 84,600
----------------
Restaurants - 3.5%
Brinker International, Inc. (a) 2,300 55,631
Tricon Global Restaurants (a) 2,500 108,750
----------------
----------------
164,381
----------------
Retail - 5.2%
Best Buy Company, Inc. (a) 1,600 76,800
GAP, Inc. 1,100 66,137
Walmart Stores, Inc. 1,400 96,600
----------------
----------------
239,537
----------------
Savings & Loans - 1.2%
Dime Bancorp, Inc. 2,400 57,150
----------------
Services - 5.0%
Dun & Bradstreet Corp. 2,400 68,100
HBO & Co. 3,700 97,125
Interpublic Group Cos., Inc. 1,100 64,350
----------------
----------------
229,575
----------------
Toys -1.4%
Hasbro, Inc. 1,900 66,619
----------------
AIT Vision U.S. Equity Portfolio
Schedule of Investments - October 31, 1998
Shares Value
Common Stocks - continued
Transportation - 4.2%
AMR Corp. (a) 1,200 $ 80,400
Delta Airlines 600 63,337
Consolidated Freightways 1,700 51,426
----------------
195,163
----------------
Utilities - 1.7%
First Energy Corp. 2,600 78,000
----------------
----------------
TOTAL COMMON STOCKS (Cost $3,985,539) 4,568,175
----------------
Money Market Securities -1.4% Principal Amount
Star Treasury, 4.96%, 11/02/98 (Cost $66,598) $ 66,698 66,598
------
TOTAL INVESTMENTS - 100.0% (Cost $4,052,137) $ 4,634,773
Other assets less liabilities - 0.0% 1,505
----------------
TOTAL NET ASSETS - 100.0% $ 4,636,278
================
<FN>
(a) non-income producing security
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AIT Vision U.S. Equity Portfolio
Statement of Assets and Liabilities
October 31, 1998
<S> <C> <C>
Assets
Investment in securities, at value (cost $4,052,137) $ 4,634,773
Receivables:
Dividends 3,712
Interest 276
Reimbursement of trustees fees 1,804
--------------------
Total assets 4,640,565
Liabilities
Payables:
Accrued advisory fee $ 2,587
Accrued trustees' fees 1,700
------------------
Total liabilities 4,287
--------------------
Net Assets $ 4,636,278
====================
Net Assets consist of:
Paid in capital $ 3,716,133
Accumulated undistributed net investment income 25,580
Accumulated undistributed net realized gain 311,929
Net unrealized appreciation on investments 582,636
--------------------
Net Assets, for 325,449 shares $ 4,636,278
====================
Net Asset Value
Net Assets
Offering price and redemption price per share ($4,634,278/325,449) $ 14.25
====================
</TABLE>
<TABLE>
<CAPTION>
AIT Vision U.S. Equity Portfolio
Statement of Operations for the year ended October 31, 1998
<S> <C> <C>
Investment Income
Dividend Income $ 60,646
Interest Income 4,388
-------------------
Total Income 65,034
Expenses
Investment advisory fee $ 33,471
Trustee's fees 1,804
-------------------
Total expenses before reimbursement 35,275
Reimbursed trustees fees (1,804)
-------------------
Total operating expenses 33,471
-------------------
Net Investment Income 31,563
-------------------
Realized & Unrealized Gain
Net realized gain on investment securities 437,654
Change in net unrealized appreciation of investment
securities 83,166
-------------------
Net gain 520,820
-------------------
Net increase in net assets resulting from operations $ 552,383
===================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AIT Vision U.S. Equity Portfolio
Statement of Changes in Net Assets
<S> <C> <C>
For the year For the year
ended ended
Increase/(Decrease) in Net Assets October 31, 1998 October 31, 1997
Operations
Net investment income (loss) $ 31,563 $ 15,530
Net realized gain (loss) 437,654 271,121
Change in net unrealized appreciation 83,166 465,335
---------------- ----------------
Net Increase in net assets resulting from operations 552,383 751,986
---------------- ----------------
Distributions to shareholders:
From net investment income (loss) (21,513) -
From net realized gain (loss) (397,998) (81,686)
---------------- ----------------
Total distributions (419,511) (81,686)
Share Transactions
Net proceeds from sale of shares 96,094 3,706,126
Shares issued in reinvestment of distributions 129,848 81,686
Shares redeemed (711,880) (95,927)
---------------- ----------------
Net increase in net assets resulting
from share transactions (485,938) 3,691,885
---------------- ----------------
Total increase in net assets (353,066) 4,362,185
Net Assets
Beginning of period $ 4,989,344 $ 627,159
---------------- ----------------
End of period [including undistributed net investment
income(loss) of $25,580 and $15,530] $ 4,636,278 $ 4,989,344
================ ================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AIT Vision U.S. Equity Portfolio
Financial Highlights
<S> <C> <C> <C>
For the year For the year For the period
ended ended ended
October 31, 1998 October 31, 1997 October 31, 1996 (b)
Selected Per Share Data
Net asset value, beginning of period $13.79 $12.62 $10.00
-------------- --------------- ---------------
Income from investment operations
Net investment income (loss) 0.09 0.06 (0.07)
Net realized and unrealized gain (loss) 1.54 2.71 2.69
-------------- --------------- ---------------
Total from investment operations 1.63 2.77 2.62
Less Distributions
From net investment income (0.06) (1.60)
From net realized gain (1.11) 0.00 0.00
-------------- --------------- ---------------
-------------- ---------------
Total Distributions (1.17) (1.60)
-------------- ---------------
Net asset value, end of period $14.25 $13.79 $12.62
============== =============== ===============
Total Return 12.87% 24.65% 26.(a)
Ratios and Supplemental Data
Net assets, end of period (000) $4,636 $4,989 $627
Ratio of expenses to average net assets 0.70% 0.70% 1.(a)
Ratio of expenses to
average net assets before reimbursement 0.74% 0.74% -
Ratio of net investment income to
average net assets 0.66% 0.50% (0.(a))
Ratio of net investment income to
average net assets before reimbursement 0.62% 0.46% -
Portfolio turnover rate 147.89% 253.52% 238.(a)
<FN>
(a) Annualized
(b) November 6, 1995 (commencement of operations) to October 31, 1996. </FN>
</TABLE>
AIT VISION U.S. EQUITY PORTFOLIO
Notes to Financial Statements
October 31, 1998
NOTE 1. ORGANIZATION
The AIT Vision U.S. Equity Portfolio (the "Fund") is a series of the AmeriPrime
Funds, an Ohio business trust (the "Trust). The Trust is registered under the
Investment Company Act of 1940, as amended, as a diversified series, open-end
management investment company whose investment objective is to provide long-term
growth of capital. The Trust Agreement permits the Trustees to issue an
unlimited number of shares of beneficial interest of separate series without par
value.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuations- Securities which are traded on any exchange or on the
NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking
a last sale price, a security is valued at its last bid price except when, in
the Adviser's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, and the Adviser determines the last
bid price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Adviser, in conformity with guidelines adopted by and subject to
review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations, but may
be valued on the basis of prices furnished by a pricing service when the Advisor
believes such prices accurately reflect the fair market value of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith by the Adviser,
subject to review of the Board of Trustees. Short-term investments in fixed
income securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
Federal Income Taxes- The Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.
AIT VISION U.S. EQUITY PORTFOLIO
Notes to Financial Statements
October 31, 1998
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued
Dividends and Distributions- The Fund intends to distribute substantially all of
its net investment income as dividends to its shareholders on an annual basis.
The Fund intends to distribute its net long-term capital gains and its net
short-term capital gains at least once a year.
Other- The Fund follows industry practice and records security transactions on
the trade date. The specific identification method is used for determining gains
or losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrual
basis. Discounts and premiums on securities purchased are amortized over the
life of the respective securities.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains Advanced Investment Technology, Inc. (the "Adviser") to manage
the Fund's investments. The Adviser is controlled by its majority shareholder,
State Street Global Advisers, a division of State Street Bank & Trust Company.
Douglas W. Case, CFA, Chief Investment Officer, Dean S. Barr, Chairman and Chief
Executive Officer and Susan Reigel Gilbreath, Portfolio Management, are
primarily responsible for the day to day management of the Fund's portfolio.
Under the terms of the management agreement (the "Agreement"), the Adviser
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of the Fund except brokerage commissions, taxes,
interest, fees and expenses of non-interested person trustees, and extraordinary
expenses. As compensation for its management services and agreement to pay the
Fund's expenses, the Fund is obligated to pay the Adviser a fee computed and
accrued daily and paid monthly at an annual rate of 0.70% of the average daily
net assets of the Fund. It should be noted that most investment companies pay
their own operating expenses directly, while the Fund's expenses, except those
specified above, are paid by the Adviser. For the period from November 1, 1997
through October 31, 1998, the Adviser received a fee of $33,471 from the Fund.
The Advisor agreed to pay other expenses to the extent necessary to maintain
total expenses at the contractual rate of 0.70%, for the period the Advisor
reimbursed expenses of $1,804.
The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator") to
manage the funds business affairs and provide the Fund with administrative
services, including all regulatory reporting and necessary office equipment and
personnel. For the year ended October 31, 1998, the Administrator received fees
of $30,000 from the Adviser for administrative services provided to the Fund.
AIT VISION U.S. EQUITY PORTFOLIO
Notes to Financial Statements
October 31, 1998
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued
The Fund retains AmeriPrime Financial Sercurities, Inc. ("the Distributor") to
act as the principal distributor of the Fund's shares. There were no payments
made to the Distributor for the year ended October 31, 1998. Certain members of
management of the Administrator and the Distributor are also members of
management of the AmeriPrime Trust.
NOTE 4. CAPITAL SHARE TRANSACTIONS
As of October 31, 1998, there was an unlimited number of no par value shares
of capital stock authorized for the Fund. Paid in capital at October 31, 1998
was $3,716,133.
Transactions in capital stock were as follows: For the periods ended
October 31:
<PAGE>
<TABLE>
<CAPTION>
1998 1998 1997 1997
Shares Dollars Shares Dollars
<S> <C> <C> <C> <C>
Shares sold 6,996 $96,094 312,107 $3,706,126
Shares issued in
reinvestment of
dividends 10,232 129,848 7,210 81,686
Shares redeemed
(53,629) (711,880) (7,160) (95,927)
-------- --------- ------- --------
(36,401) ($485,938) 312,157 $3,691,885
</TABLE>
<PAGE>
NOTE 5. INVESTMENTS
For the period from year ended October 31, 1998, purchases and sales of
investment securities, other than short-term investments, aggregated $7,076,453
and $7,930,697, respectively. The gross unrealized appreciation for all
securities totaled $681,306 and the gross unrealized depreciation for all
securities totaled $98,670 for a net unrealized appreciation of $582,636. The
aggregate cost of securities for federal income tax purposes at October 31, 1998
was $4,052,137.
AIT VISION U.S. EQUITY PORTFOLIO
Notes to Financial Statements
October 31, 1998
NOTE 6. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 7. YEAR 2000 ISSUE
Like other mutual funds, financial and business organizations and individuals
around the world, the fund could be adversely affected if the computer systems
used by the Adviser, Administrator or Servicers do not properly process and
calculate date-related information and data from and after January 1, 2000. This
is commonly known as the "Year 2000 Issue" The Adviser and Administrator have
taken steps that they believe are reasonably designed to address the Year 2000
Issue with respect to computer systems that are used and to obtain reasonable
assurances that comparable steps are being taken by each of the Fund's major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund.
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and Board of Trustees
AIT Vision U.S. Equity Portfolio
We have audited the accompanying statement of assets and liabili-
ties of AIT Vision U.S. Equity Portfolio (a member of the Ameriprime Fund
series), including the schedule of portfolio investments, as of October 31,
1998, and the related statement of operations, the statement of changes in net
assets, and the financial highlights for each of the periods indicated. These
financial statements and financial highlights are the responsi-
bility of the Fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held by
the custodian as of October 31, 1998, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIT
Vision U.S. Equity Portfolio as of October 31, 1998 and the results of its
operations, the changes in its net assets, and the financial highlights for each
of the periods indicated, in conformity with generally accepted accounting
principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
November 9, 1998
<PAGE>
November 6, 1998
Dear Shareholder:
Thank you once again for your investment in the Corbin Small-Cap Value Fund. All
of the employees of the investment advisor, Corbin & Company, have been working
very hard this year trying to achieve the best overall performance for this
fund. Unfortunately, some factors did not allow us to achieve the results we had
anticipated for this year. A poor market for smaller stocks, a continued lack of
interest in value investing, disappointments at portfolio companies, and plain
old "bad luck" were all factors in the results. Last year in the annual report,
I mentioned that what we are doing is to be measured over a period of
five-to-ten years, not over one-to-two year periods. That is what separates
speculators from investors.
OVERALL PORTFOLIO CHARACTERISTICS AND COMMENTARY
As of October 31st, the portfolio contained 26 equities, with 92.1% of the money
in equity securities, and 7.9% in cash. I can honestly say that this has been
the most frustrating year that I have ever experienced during my time as an
investment professional. While the loss in value by our stocks is always
disheartening, what is truly maddening is that, by and large, earnings were
above or in-line with analysts' estimates. Several of our stocks have seen their
estimates rise over the past few quarters, while others have remained relatively
intact. This is despite an environment that has been relatively inhospitable to
the vast majority of companies. Thinking that the situation must be changing, I
have spent the last few weeks on the telephone, in talks with top management at
several of our portfolio companies. With two notable exceptions, business
remains substantially above the levels of last year and even above internal
expectations. This is witnessed by the fact that a large number of our companies
announced buybacks of their shares, or are about to do so. It is clear that, in
the next few months, several firms will be taking the opportunity to repurchase
their shares at depressed valuations.
Why has the market wiped the value of the Russell 2000 down by almost 33% since
April 21, and the average NYSE stock is 45% off of its highs? It comes down to
one word - fear. Fear that the big banks are going to implode due to derivative
exposure. Fear due to the belief that interest rates are not low enough and that
the Federal Reserve cannot be decisive. Fear that an economic slowdown will hurt
U.S. corporate profits. Personally, I abhor fear, because it begets more fear.
If bankers, investors, and consumers give in to these fears, it will result in
the thing they most fear - a recession brought on by a credit crunch. Just as in
our personal lives, 99% of the things we worry about never come to pass, that is
also true about the economy. I am not saying that there may not be a
continuation of the "bumps in the road" suffered over the last few months, but
what I am saying is that the dire predictions of the failure of major
money-center banks, brokerage firms, and mega-hedge funds will not come to pass.
In fact, we have positioned ourselves to profit from this time, even though it
should not be as bad as predicted by many seers.
Bonded Motors should thrive if the economy slows down, as people keep their
vehicles longer. Durakon Industries' Jerr-Dan division should prosper as towing
demand and low interest rates increase the demand for towing vehicles, while
Duraliner benefits from the same factor as Bonded. Wabash National will benefit
from lower rates and its position as the premier truck trailer firm. Our
specialty metals companies will benefit from strong cash flow and contracts with
premier companies in the different industries they service. Duckwall-Alco's
small town exposure and sales mix leave it unsusceptible to many of the problems
facing bigger retailers. VTEL will capitalize on the "time and money" factor to
help reduce costs for business. If it sounds like I am bullish on our securities
and our positioning, that would be correct. Share price means something only if
you are intending to sell these securities in the short-term, which we are not
expecting to do to any large extent. I believe as much today in the companies we
own as the day we bought them, and we are going to concentrate our funds in
them.
SPECIAL NOTE ON SHAREHOLDER ACTIVISM
Due to the extraordinary opportunities that have evolved in the last six months,
our firm has been active in the area of corporate governance and working with
company managements to increase shareholder value. I believe that when you look
at the number of companies we own that have chosen to make strategic operational
and financial moves, you can appreciate our work. In three cases, we have filed
Schedule 13D with the Securities and Exchange Commission concerning our
interests. A Schedule 13D is filed when a firm controls more than 5% of a
company's stock and is requesting a change in capitalization or dividend policy,
or representation on the board. While a Schedule 13D often represents a
confrontation situation, we are using it as a public forum to express our views
to the board of directors. We do not consider this confrontational, but rather a
way to address the concerns that investors are feeling. It also helps to draw
public attention to the company and its prospects.
I believe that you will see more of this action from our firm in the future. We
pride ourselves as being patient investors and have given substantial
opportunity for some of these situations to develop. Sometimes it is important
to refocus a firm on what it is primarily trying to accomplish, which is the
addition of shareholder value. In those cases where we feel that a reminder is
in order, and we control more than 5% of a firm's shares, I would look for a 13D
to be filed.
PERFORMANCE DISCUSSION
The fund generated a total return of -36.07% for the twelve months ended October
31, 1998. The Russell 2000 returned -11.64%, and the S&P 600 Small-Cap returned
- -11.07%. Clearly, there is no use talking about which stocks surprised us on the
upside or downside, because the individual securities in this situation do not
matter. What matters is the investment market's complete markdown of small-cap
equity securities, and the belief that now is the time for "taking chips off the
table." It is my belief that there will continue to be a tremendous number of
economic bargains in the marketplace, and that investors will eventually
gravitate toward them.
I also believe that it is important to mention that this situation represents an
excellent opportunity to add to the fund at these lower levels. Employees and
their family members own approximately 15% of the fund, and many of these have
used the price weakness to add to their positions. Investment programs that
utilize dollar-cost averaging, or regular contributions, are able to take
advantage of times of market instability to create an attractive investment
average over a period of time.
-------------------------------------------------------------
Returns for the Periods Ended 10/31/98
-------------------------------------------------------------
Total Average
Annual Return
Since Inception
Fund/Index 1 Year June 30, 1997
---------- ------ -------------
Corbin Small-Cap Value Fund -36.07% -22.96%
S&P 600 Small-Cap -11.07% -.75%
Russell 2000 -11.64% -2.29%
----------------------------------- ------------------ -----------------
Corbin S&P 600 Russell 2000
----------------------------------------------------
6/30/97 10,000 10,000 10,000
7/31/97 10,310 10,629 10,467
8/31/97 10,520 10,897 10,703
9/30/97 11,330 11,617 11,485
10/31/97 11,030 11,116 10,975
11/30/97 11,209 11,035 10,900
12/31/97 10,916 11,257 11,095
1/31/98 10,575 11,037 10,926
2/28/98 10,853 12,043 11,746
3/31/98 11,257 12,503 12,239
4/30/98 11,171 12,577 12,306
5/30/98 10,617 11,910 11,646
6/30/98 10,511 11,945 11,680
7/31/98 9,595 11,031 10,726
8/31/98 7,401 8,905 8,646
9/30/98 7,187 9,448 9,272
10/31/98 7,049 9,887 9,652
This chart shows the value of a hypothetical initial investment of $10,000 in
the Fund, the S&P 600 Small-Cap Index, and the Russell 2000 Index on June 30,
1997 and held through October 31, 1998. The S&P 600 Index and the Russell 2000
Index are widely recognized unmanaged indices of common stock prices.
Performance figures include the change in value of the stocks in the indices,
and reinvestment of dividends, and are not annualized. The index returns do not
reflect expenses, which have been deducted from the Fund's return. THE FUND'S
RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF FUTURE RESULTS.
DESCRIPTION OF INDIVIDUAL SECURITY ISSUES
As in the past report, I would like to very briefly discuss the securities now
held in the portfolio.
Aames Financial (AAM) - The company is a leader in the sub-prime lending
business. This category of stocks has dramatically under-performed the market
and other financial service stocks, due to gain-on-sale accounting issues. Aames
has significant service revenue, compared to other firms in the industry.
American Buildings Company (ABCO) - ABCO is a manufacturer of metal building
systems, which are used for residential and non-residential markets.
Bonded Motors (BMTR) -The company is the leader in the area of rebuilding auto
engines. It is also expected to be a premier consolidator in this industry.
Butler Manufacturing (BBR) - The company is the leading maker of metal buildings
worldwide. The metal building market is growing rapidly and is highly lucrative
in terms of margins and return on investment.
Cott Corporation (COTTF) - Cott is the premier producer of retail brand
beverages, including soft drinks, juice drinks and bottled water.
Delta Financial Corp. (DFC) - DFC is a sub-prime lender in the same industry as
Aames Financial. Delta has some of the most conservative gain-on-sale accounting
practices in the business, which, after our meeting with management, appeared to
make the stock dramatically undervalued.
Dawson Geophysical (DWSN) - Dawson processes three-dimensional seismic data used
in the exploration and development of oil and natural gas reserves.
Duckwall-Alco Stores (DUCK) - The company operates a chain of over 200 discount
variety stores, primarily in the central United States.
Durakon Industries (DRKN) - We believe DRKN to be one of the most dramatically
undervalued companies in American manufacturing. The company produces the
Duraliner pickup truck bedliners and Jerr-Dan towing vehicles.
Griffon Corp. (GFF) - Griffon manufactures building products, specialty plastic
films, and electronic information and communications systems. The recent
downturn in the market allowed us to purchase the stock at less than 8X expected
earnings.
Ingles Markets (IMKTA) - This supermarket chain operator serves as a defensive
stock in case of economic difficulties and offers a 5%+ dividend yield.
Kuhlman Corp. (KUH) - Kuhlman serves the consumer and utility markets by
manufacturing power transformers and electrical wires and cables.
Lone Star Steakhouse & Saloon (STAR) - This provider of premium and mid-priced
steaks obtained a cheap valuation due to several earnings disappointments on
Wall Street. The company announced plans to begin aggressively marketing its
products, which should increase earnings within a few quarters.
Onyx Acceptance Corp. (ONYX) - Onyx is a specialty finance company, which
focuses on prime and non-prime automobile lending.
Play-By-Play Toys & Novelties (PBYP) - The company is a leader in the plush,
stuffed toy business, as well as games for amusement parks. The company trades
at a low multiple to this year's expected earnings.
Quanex (NX) - Quanex manufactures specialty metal products from carbon and alloy
steel and aluminum. The company is focused on manufacturing proprietary and
customized products.
RailTex (RTEX) - RailTex operates short-line railroads and also consults on the
management of international railroads. The stock is very cheap compared to the
market, as well as its peer group, and is in a business that is rapidly
consolidating.
Republic Group (RGC) - The company recycles paper and makes gypsum wallboard. In
addition, the company has excellent financial statements, with no debt.
Rush Enterprises (RUSH) - Rush operates a regional network of truck dealerships,
primarily "Peterbilt" ones. The stock was purchased at less than 8X expected
earnings, despite the estimate of 20% per year growth for the company.
Seitel Corp. (SEI) - The drop in oil prices led us to this high-quality
geophysical firm. We feel the company has been unrecognized due to its "oil
patch" label.
Steel of West Virginia (SWVA) - Steel of West Virginia is a producer of
specialty steel products, which are used in the construction of truck trailers,
industrial lift trucks, and manufactured housing.
Successories (SCES) - The company designs and manufactures recognition and
motivation products. Same-store sales continue to show strong comparisons, and
prospects are brightening considerably.
Titan Corp. (TTN) - TTN manufactures information and electronic systems. The
company is attempting to receive FDA approval on its latest product, which will
be used for food pasteurization and should boost sales tremendously.
Unifab (UFAB) - The company is a leader in the manufacturing of off-shore oil
platforms. The firm sells for the highest value score in our universe of stocks.
VTEL (VTEL) - VTEL is a maker of video-telecommunication equipment. We continue
to believe that this is going to be a huge gainer in the near future.
Wabash National (WNC) - Wabash is the leading manufacturer of truck trailers.
FINAL THOUGHTS
Over the last few months I have come to the conclusion that America is now in
the midst of a bubble concerning large-cap securities, with the public
speculating frantically on equity securities of questionable value. They have
ignored the places where true value still exists, eschewing fundamentals. I
remember during the 1988-1989 time period, people in this country said that
Japanese stocks could not continue to trade at 30X-50X earnings. Many people
came to reason that they would be able to do it and invested in that market,
with dire consequences for portfolios. Today the P/E of the S&P 500 stands at
23.8X next year's earnings estimates, with the "mega-cap" stocks having average
P/E ratios substantially higher. Clearly, this is not something that is
sustainable over the long-term.
I personally have only three investments: my stake in Corbin & Company and the
Corbin Small-Cap Value Fund are 99% of the total. Clearly, I believe in this
process and these securities. I am taking every opportunity to personally add to
what we are doing here, and I urge you, at these prices, to continue to do the
same. Some of America's best companies are on sale, and, although there is no
blue light flashing to indicate it, I believe that it is as apparent as when the
Gulf War Crisis caused a vast markdown of stocks in 1991, rising rates triggered
the Crash of 1987, and the political and economic events of 1973 caused that
decline. I thank you for your support and can promise you that we are doing
everything possible to achieve the maximum results, while not straying from our
discipline.
Sincerely,
David A. Corbin, CFA
President and Chief
Investment Officer
<PAGE>
<TABLE>
<CAPTION>
Corbin Small-Cap Value Fund
Schedule of Investments - October 31, 1998
<S> <C> <C>
Common Stocks - 92.6% Shares Value
Auto Parts & Accessories - 4.2%
Bonded Motors, Inc. (a) 12,000 $ 96,000
-----------------
Bottled & Canned Soft Drinks - 3.2%
Cott Corp (Quebec) (a) 12,440 73,085
-----------------
Business Services - 4.0%
VTEL Corp. (a) 20,000 91,250
-----------------
Building Materials - 2.6%
Republic Group, Inc. 4,000 59,250
-----------------
Catalog & Mail Order Services - 7.7%
Successories, Inc. (a) 59,000 177,000
-----------------
Communications - 3.7%
Unifab International Inc. (a) 7,000 85,312
-----------------
Department Stores - 3.7%
Duckwall Alco Stores, Inc. (a) 7,500 84,375
-----------------
Diversified Industrials - 3.0%
Griffon Corporation (a) 7,000 68,687
-----------------
Electrical Components - 3.5%
Kuhlman Corp. 3,000 79,500
-----------------
Fabricated Metal Products - 7.4%
American Buildings Co. (a) 4,630 111,120
Butler Manufacturing Co. 2,600 58,500
-----------------
169,620
-----------------
Financial Services - 17.0%
Aames Financial Corp. 67,100 276,788
Delta Financial Corp. (a) 5,000 28,438
Onyx Acceptance Corp. (a) 13,600 85,000
-----------------
-----------------
390,226
-----------------
Food Retailers - 1.1%
Ingles Markets Inc., Class A 2,000 25,000
-----------------
Oil Drilling & Exploration - 1.3%
Dawson Geophysical (a) 3,000 30,000
-----------------
Oil & Gas Services - 3.0%
Seitel Corp. (a) 5,100 67,575
-----------------
Corbin Small-Cap Value Fund
Schedule of Investments - October 31, 1998 - continued
Common Stocks - continued Shares Value
Railroads - 0.8%
Rail Tex, Inc. (a) 1,700 $ 18,381
-----------------
Recreational Vehicles - 4.6%
Durakon Industries, Inc. (a) 11,000 105,875
-----------------
Restaurants - 2.8%
Lone Star Steakhouse & Saloon (a) 8,030 64,240
-----------------
Retailers - 5.3%
Rush Enterprises, Inc. (a) 8,400 95,550
Titan Corp. (a) 5,000 25,938
-----------------
-----------------
121,488
-----------------
Toys - 3.4%
Play by Play Toys & Novelties (a) 9,500 78,375
-----------------
Trucks/Trailers - 3.7%
Wabash National Corp. 4,715 83,690
-----------------
Steel Manufacturing - 6.6%
Quanex Corp. 3,780 63,788
Steel of West Virginia, Inc. (a) 14,540 86,332
-----------------
150,120
-----------------
-----------------
TOTAL COMMON STOCKS (Cost $2,674,140) 2,119,049
-----------------
Money Market Securities - 8.0% Principal Amount Value
Star Treasury 4.83% 11/2/98 (Cost $183,279) $ 183,279 $ 183,279
-----------------
TOTAL INVESTMENTS - 100.6% (Cost $2,857,419) 2,302,328
Excess of liabilities over other assets - (0.6%) (13,324)
-----------------
Total Net Assets - 100.0% $ 2,289,004
=================
<FN>
Legend
(a) non-income producing
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Corbin Small-Cap Value Fund October 31, 1998
Statement of Assets & Liabilities
<S> <C> <C>
Assets
Investment in securities, at value (cost $2,857,419) $ 2,302,328
Interest receivable 220
--------------------
Total assets 2,302,548
Liabilities
Redemptions payable $ 11,405
Accrued investment advisory fee payable 2,139
---------------
Total liabilities 13,544
--------------------
Net Assets $ 2,289,004
====================
Net Assets consist of:
Paid in capital $ 3,397,627
Accumulated undistributed net investment income (loss) (1,444)
Accumulated undistributed net realized gain (loss) on investments (552,088)
Net unrealized appreciation (depreciation) on investments (555,091)
--------------------
Net Assets, for 345,840 shares $ 2,289,004
====================
Net Asset Value
Net Assets
Offering price and redemption price per share ($2,289,004/345,840) $ 6.62
====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Corbin Small-Cap Value Fund
Statement of Operations for the year ended October 31, 1998
<S> <C> <C>
Investment Income
Dividend Income $ 16,124
Interest Income 6,197
--------------------
Total Income 22,321
Expenses
Investment advisory fee $ 24,417
Trustees' fees 954
----------------
Total Operating Expenses 25,371
--------------------
Net Investment Income (Loss) (3,050)
--------------------
Realized & Unrealized Gain (Loss)
Net realized gain (loss) on investment securities (467,038)
Change in net unrealized depreciation on investment securities (599,782)
-----------------
--------------------
Net gain (loss) on investment securities (1,066,820)
--------------------
Net increase (decrease) in net assets resulting from operations $ (1,069,870)
====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Corbin Small-Cap Value Fund
Statement of Changes in Net Assets
<S> <C> <C>
For the periods ended October 31
Increase/(Decrease) in Net Assets 1998 1997 (a)
Operations
Net investment income (loss) $ (3,050) $ (5)
Net realized gain (loss) (467,038) 5,918
Change in net unrealized appreciation (depreciation) (599,782) 44,691
---------------- ----------------
Net Increase in net assets resulting from operations (1,069,870) 50,604
---------------- ----------------
Distributions to shareholders:
From net investment income (1,444) -
From net realized gain (90,963) -
---------------- ----------------
----------------
Total distributions (92,407) -
----------------
Share Transactions
Net proceeds from sale of shares 2,309,098 1,283,875
Shares issued in reinvestment of distributions 86,814 -
Shares redeemed (279,062) (48)
---------------- ----------------
Net increase in net assets resulting
from share transactions 2,116,850 1,283,827
---------------- ----------------
Total increase in net assets 954,573 1,334,431
Net Assets
Beginning of period $ 1,334,431 $ -
---------------- ----------------
End of period [including undistributed net investment
income(loss) of ($3,050) and ($5)] $ 2,289,004 $ 1,334,431
================ ================
<FN>
(a) June 30, 1997 (Commencement of Operations) to October 31, 1997.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Corbin Small-Cap Value Fund
Financial Highlights
<S> <C> <C>
For the periods ended October 31 1998 1997 (b)
Selected Per Share Data
Net asset value, beginning of period $ 11.03 $ 10.00
------------ -------------
Income from investment operations
Net investment income (0.01) -
Net realized and unrealized gain (loss) (3.76) 1.03
------------ -------------
Total from investment operations (3.77) 1.03
------------ -------------
Less Distributions
From net interest income (0.01) -
From net realized gain (loss) (0.63) -
------------ -------------
Total Distributions (0.64) -
------------ -------------
Net asset value, end of period $ 6.62 $ 11.03
============ =============
Total Return -36.07% 30.(a)
Ratios and Supplemental Data
Net assets, end of period (000) $2,289 $1,334
Ratio of expenses to
average net assets 1.(a) 1.(a)
Ratio of net investment income to
average net assets (0.(a)% 0.00%
Portfolio turnover rate 86.42% 20.41%
<FN>
(a) Annualized
(b) June 30, 1997 (Commencement of Operations) to October 31, 1997 </FN>
</TABLE>
<PAGE>
CORBIN SMALL-CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
NOTE 1. ORGANIZATION
The Corbin Small-Cap Value Fund (the "Fund") is organized as a series of the
AmeriPrime Funds, an Ohio business trust (the "Trust"). The Trust is registered
under the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The investment objective of the Fund is to
provide long-term capital appreciation to its shareholders. The Trust Agreement
permits the trustees to issue an unlimited number of shares of beneficial
interest of separate series without par value.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuation- Securities which are traded on any exchange or on the
NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking
a last sale price, a security is valued at its last bid price except when, in
the Adviser's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, and the Adviser determines the last
bid price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Adviser, in conformity with guidelines adopted by and subject to
review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations, but may
be valued on the basis of prices furnished by a pricing service when the Adviser
believes such prices accurately reflect the fair market values of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith by the Adviser,
subject to review of the Board of Trustees. Short-term investments in fixed
income securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
CORBIN SMALL-CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
Federal Income Taxes- The Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.
Dividends and Distributions- The Fund intends to distribute substantially all of
its net investment income as dividends to its shareholders on an annual basis.
The Fund intends to distribute its net long-term capital gains and its net
short-term capital gains at least once a year.
Other- The Fund follows industry practice and records security transactions on
the trade date. The specific identification method is used for determining gains
or losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrual
basis. Discounts and premiums on securities purchased are amortized over the
life of the respective securities.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains Corbin & Company (the "Adviser") to manage the Fund's
investments. David A. Corbin , President of the Adviser, is primarily
responsible for the day to day management of the Fund's portfolio.
Under the terms of the management agreement (the "Agreement"), the Adviser
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of the Fund except brokerage commissions, taxes,
interest, fees and expenses of the non-interested person trustees, and
extraordinary expenses. As compensation for its management services and
agreement to pay the Fund's expenses, the Fund is obligated to pay the Adviser a
fee computed and accrued daily and paid monthly at an annual rate of 1.25% of
the average daily net assets of the Fund. It should be noted that most
investment companies pay their own operating expenses directly, while the Fund's
expenses, except those specified above, are paid by the Adviser. For the year
ended October 31, 1998, the Adviser has received a fee of $24,417 from the Fund.
The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator")
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 the year ended October 31, 1998, the Administrator received fees
of $30,000 from the Adviser for administrative services provided to the Fund.
The Fund retains AmeriPrime Financial Securities, Inc. (the "Distributor")
to act as the principal distributor of the Fund's shares. There were no payments
made to the Distributor for the year ended October 31, 1998. Certain members of
management of the
CORBIN SMALL-CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued
Administrator and the Distributor are also members of management of the
AmeriPrime Trust.
NOTE 4. CAPITAL SHARE TRANSACTIONS
As of October 31, 1998, there was an unlimited number of no par value shares of
capital stock authorized for the Fund. Paid in capital at October 31, 1998 was
$3,400,677.
Transactions in capital stock were as follows:
For the periods ended October 31:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
1998 1998 1997 1997
Shares Dollars Shares Dollars
-------------------- --------------------- --------------------- --------------------
Shares sold 248,212 $2,309,098 120,985 $1,283,875
Shares issued in
reinvestment of
dividends 8,831 86,814 - -
Shares redeemed
(32,184) (279,062) (4) (48)
-------- ------------ ----------- ------------
224,859 $2,116,850 120,981 $1,283,827
-------------------- --------------------- --------------------- --------------------
</TABLE>
NOTE 5. INVESTMENTS
For the year ended October 31, 1998, purchases and sales of investment
securities, other than short-term investments, aggregated $3,758,019 and
$1,748,592, respectively. The gross unrealized appreciation for all securities
totaled $56,580 and the gross unrealized depreciation for all securities totaled
$611,671, for a net unrealized depreciation of $555,091. The aggregate cost of
securities for federal income tax purposes at October 31, 1998 was $2,857,419.
NOTE 6. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
<PAGE>
CORBIN SMALL-CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
NOTE 7. RELATED PARTY TRANSACTIONS
The Adviser is not a registered broker-dealer of securities and thus does not
receive commissions on trades made on behalf of the Fund. The beneficial
ownership, either directly or indirectly, of more than 25% of the voting
securities of a Fund creates a presumption of control of the Fund, under Section
2(a)(9) of the Investment Company Act of 1940. As of October 31, 1998, Charles
Schwab & Co. owned in aggregate more than 25% of the Fund.
NOTE 8. RECLASSIFICATION
In accordance with SOP 93-2, the Fund has recorded a reclassification in the
capital accounts. As of October 31, 1998, the Fund recorded permanent book/tax
differences of $3,050 from undistributed net investment income to paid in
capital. This reclassification has no impact on the net asset value of the fund
and is designed generally to present undistributed income and realized gains on
a tax basis which is considered to be more informative to shareholders.
NOTE 9. YEAR 2000 ISSUE
Like other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by the Adviser, Administrator or Servicers do not properly process and
calculate date-related information and data from and after January 1, 2000. This
is commonly known as the "Year 2000 Issue." The Adviser and Administrator have
taken steps that they believe are reasonably designed to address the Year 2000
Issue with respect to computer systems that are used and to obtain reasonable
assurances that comparable steps are being taken by each of the Fund's major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and Board of Trustees
Corbin Small Cap Value Fund
We have audited the statement of assets and liabilities including the portfolio
of investments, of the Corbin Small Cap Value Fund (a member of the Ameriprime
Fund Series) as of October 31, 1998, and the related statement of operations,
the statement of changes in net assets, and the financial highlights for each of
the periods indicated. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1998, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting prin-
ciples used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Corbin Small Cap Value Fund as of October 31, 1998, the results of its
operations, the changes in its net assets, and the financial highlights for each
of the periods indicated in conformity with generally accepted accounting
principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
November 9, 1998
<PAGE>
November 1, 1998
Dear Shareholders,
Since its inception, the Fund has produced an average annual return of
17.3%, handily outperforming historical norms and the CPI. In the past year, the
market has rewarded investment vehicles that focus on growth stocks in glamorous
industries like the internet, personal computers and telecommunications. Within
this environment, our disciplined, risk averse style failed to keep pace with
the higher multiple stocks that have kept the market in positive territory.
Comparative Investment 12 Months Average**
Returns Ended 10/31/98 Annual Return
- ----------------------------------- ----------------- -----------------
Carl Domino Equity Income Fund -3.2% 17.3%
S&P 500 * 22.0% 24.9%
Carl Domino Equity Income Fund S&P 500
03/31/96 $ 10,515.00 $ 10,539.00
6/30/96 $ 11,204.78 $ 11,004.82
9/30/96 $ 11,475.94 $ 11,349.27
12/31/96 $ 12,435.33 $ 12,301.48
3/31/97 $ 12,810.88 $ 12,631.16
6/30/97 $ 14,618.49 $ 14,834.03
9/30/97 $ 16,406.33 $ 15,942.13
12/31/97 $ 16,831.26 $ 16,404.46
3/31/98 $ 18,120.53 $ 18,691.24
6/30/98 $ 16,926.39 $ 19,304.31
9/30/98 $ 14,179.23 $ 17,381.60
10/31/98 $ 15,446.86 $ 18,805.15
* Past performance is not predictive of future performance. This chart assumes
an initial investment of $10,000 in the Fund and the S&P 500 Index on December
1, 1995 and held through October 31, 1998. The S&P 500 Index is a widely
recognized unmanaged index of common stock prices. Performance figures include
the change in value of the stocks in the index and reinvestment of dividends,
and are not annualized. **Since inception on December 1, 1995.
At times like this, we must remember the markets move in cycles and,
during the past year, we have simply been on the downside of the cycle. One of
factors which influences the cycle is that growth stocks tend to outperform in
periods of low and falling inflation when future earnings are worth more. At the
peak of a growth cycle, when the market is expensive or overvalued, it becomes
difficult to purchase growth stocks. Therefore, value stocks return to favor. We
remain committed to our proven investment strategy and we will continue to do
what we always do, which is to identify, research and buy good companies that
are currently unappreciated by the market and represent good long term value.
While it is impossible to predict the timing of a definitive upturn for value
stocks, this should be a good time to invest or commit additional assets to the
Fund. Indeed, as the October results indicate (up 8.9% vs. 8.2% for the S&P) the
summer market weakness created buying opportunities not seen for years. We
appreciate your confidence in us during the past year and want you to know that
we will continue to do our best to uncover the best values to own in your Fund.
Best regards,
Carl J. Domino
<PAGE>
<TABLE>
<CAPTION>
CARL DOMINO EQUITY INCOME FUND
Schedule of Investments - October 31, 1998
<S> <C> <C>
Common Stocks - 96.6% Shares Value
Autos, Auto Parts - 3.0%
Chrysler Corp. 1,635 $ 78,684
Snap On Inc. 4,000 141,750
----------------
----------------
220,434
----------------
Chemicals - 3.0%
DuPont (E.I.) De Nemours 2,000 115,000
Witco Corp. 5,400 101,588
----------------
----------------
216,588
----------------
Paper & Forest Products - 1.9%
Weyerhaeuser Co. 3,000 140,438
----------------
ENERGY
Oil & Gas - 18.0%
Conoco Inc. (a) 10,000 248,750
Midcoast Energy Resources 4,400 83,600
Mobil Corporation 2,000 151,375
Sonat Corporation 4,100 124,281
Sun Co., Inc. 3,500 120,094
Unocal Corp. 4,500 152,719
USX Marathon Group 3,800 124,213
Williams Companies 7,100 194,806
YPF Sociedad Anonima 4,200 121,538
----------------
1,321,376
----------------
Retail - 4.7%
Intimate Brands 7,600 170,050
May Department Stores 2,900 176,900
----------------
346,950
----------------
Lodging, Restaurants, Leisure - 2.0%
Adams Golf (a) 4,000 18,500
Cedar Fair, LP 1,000 24,812
Patriot American Hospitality Inc. 11,980 106,322
----------------
149,634
----------------
NON-DURABLES
Cosmetics 4.7%
Avon Products 4,740 188,118
International Flavors & Fragrances 4,100 153,494
----------------
----------------
341,612
----------------
Food - 5.0%
General Mills Inc. 1,800 132,300
Heinz (H.J.) 1,800 104,625
Quaker Oats 2,200 129,937
----------------
----------------
366,862
----------------
Household Products - 1.6%
Kimberly-Clark Group 2,400 115,800
----------------
CARL DOMINO EQUITY INCOME FUND
Schedule of Investments -
Common Stocks - continued Shares Value
Tobacco - 1.8%
Philip Morris 2,550 $ 130,369
----------------
HEALTH
Drugs - 6.2%
American Home Products Corp. 3,300 160,875
Glaxo Wellcome PLC 2,300 143,175
Pharmacia & Upjohn Inc. 2,800 148,225
----------------
----------------
452,275
----------------
Diversified Medical - 2.4%
Pall Corporation 7,000 176,750
----------------
Health Care - 1.2%
Baxter International Inc. 1,500 89,906
----------------
Staples/Miscellaneous Services - 1.1%
Deluxe Corporation 2,600 84,175
----------------
Services/Miscellaneous - 2.7%
DA Consulting Group 1,000 15,000
EPL Technologies 3,000 15,562
Genisis Direct, Inc. (a) 1,000 4,625
Healthword Corp (a) 3,000 45,000
Unisource Worldwide 12,550 115,303
----------------
195,490
----------------
Technology- 1.0%
Hypercom Corp.(a) 8,000 76,000
----------------
Electrical Equipment - 3.3%
AMP Inc. 2,617 107,460
SPX Corp. 1 16
Thomas & Betts 3,000 134,063
----------------
----------------
241,539
----------------
Diversified Machinery - 2.1%
Federal Signal Corp. 6,465 155,564
----------------
Diversified Technology- 1.9%
Tektronix Inc. 8,000 143,000
----------------
Airlines, Truckers, & Railroads - 1.5%
Knightsbridge Tankers Ltd. A 5,000 108,750
----------------
Consumer Non-Durables - 0.4%
Ultralife Batteries, Inc. 5,000 26,719
----------------
Photography/Office Equipment - 3.2%
Eastman Kodak 1,850 143,375
Minnesota Mining & Manufacturing 1,100 88,000
----------------
----------------
231,375
----------------
Finance
Major Regional & Other Banks - 8.5%
BankAmerica Corp. 1,700 97,750
Community Savings Bankshares 7,000 156,625
PNC Bank Corp. 2,200 110,000
South Trust Corp. 3,650 133,225
Summitt Bancorp 3,400 128,988
----------------
626,588
----------------
Insurance - 2.0%
ITT Hartford Financial Service Group 1,700 90,313
Penn-American Group 6,000 56,625
----------------
----------------
146,938
----------------
Utilities
Electric - 2.2%
Korea Electric Power Corp.-SP ADR 13,000 165,750
----------------
Natural Gas - 2.0%
El Paso Energy Corp. 4,054 143,664
----------------
Telephone/Communications- 8.1%
AT&T Corp. 2,700 168,075
Amerilink Corp. (a) 1,900 16,150
Frontier Corp. 4,500 135,281
Harris Corp. 5,000 175,313
Telefonica de Argentina 3,000 99,187
----------------
594,006
----------------
REITs - 1.1%
CCA Prison Realty Corp. 3,500 82,250
----------------
TOTAL COMMON STOCKS - % (Cost $6,898,701) 7,090,802
----------------
Preferred Stock - 1.2%
Conseco Financial Preferred Series F (Cost $100,000) 2,000 85,875
----------------
CARL DOMINO EQUITY INCOME FUND - continued Schedule of Investments - October 31,
1998
Principal
Amount Amount
Money Market Securities - 1.3%
Star Treasury 4.96% 11/2/98 (Cost $93,675) $ 93,675 $ 93,675
----------------
TOTAL INVESTMENTS - 99.1% (Cost $ 7,092,376) 7,270,352
Other assets less liabilities - 0.9% 67,408
----------------
TOTAL NET ASSETS - 100.00% 7,337,760
----------------
<FN>
(a) non-income producing
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Carl Domino Equity Income Fund October 31, 1998
Statement of Assets & Liabilities
<S> <C> <C>
Assets
Investment in securities, at value (cost $7,092,376) $ 7,270,352
Cash 175,660
Receivables:
Investments sold 38,466
Subscriptions 1,000
Dividends 9,808
Interest 424
Reimbursement receivable 1,864
--------------------
Total assets 7,497,574
Liabilities
Payables:
Investments purchased 149,412
Advisory fee 8,648
Trustees fees 1,754
------------------
Total liabilities 159,814
--------------------
Net Assets $ 7,337,760
====================
Net Assets consist of:
Paid in capital $ 7,133,946
Accumulated undistributed net investment income 68,951
Accumulated undistributed net realized gain (loss) on investments (43,113)
Net unrealized appreciation on investments 177,976
--------------------
Net Assets, for 499,817 shares $ 7,337,760
====================
Net Asset Value
Net Assets
Offering price and redemption price per share ($7,337,760/499,817) $ 14.68
====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Carl Domino Equity Income Fund
Statement of Operations for the period ended October 31, 1998
<S> <C> <C>
Investment Income
Dividend income $ 157,609
Interest income 5,223
--------------------
Total Investment Income 162,832
Expenses
Investment advisory fee $ 85,109
Trustees' fees 1,844
---------------
Total Expenses before Reimbursement 86,953
Reimbursed expenses (1,844)
---------------
Total Operating Expenses 85,109
--------------------
Net Investment Income (Loss) 77,723
--------------------
Realized & Unrealized Gain (Loss)
Net realized gain (loss) on investment transactions (14,920)
Change in net unrealized appreciation (depreciation) on investment securities (341,521)
---------------
Net gain (loss) on investment securities (356,441)
--------------------
Net increase (decrease) in net assets resulting from operations $ (278,718)
====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Carl Domino Equity Income Fund
Statement of Changes in Net Assets
<S> <C> <C>
For the year For the year
ended ended
October 31, 1998 October 31, 1997
Increase/(Decrease) in Net Assets
Operations
Net investment income $ 77,723 28,588
Net realized gain on investment transactions (14,920) 224,774
Change in net unrealized appreciation (341,521) 392,756
--------------- ---------------
Net Increase in net assets resulting from operations (278,718) 646,118
--------------- ---------------
Distributions to shareholders:
From net investment income (37,359) (11,997)
From net realized gain (250,840) (10,581)
--------------- ---------------
--------------- ---------------
Total distributions (288,199) (22,578)
--------------- ---------------
Capital Share Transactions
Net proceeds from sale of shares 4,543,528 2,354,635
Shares issued in reinvestment of distributions 285,845 20,953
Shares redeemed (675,074) (371,396)
--------------- ---------------
Net increase in net assets resulting
from share transactions 4,154,299 2,004,192
--------------- ---------------
Total increase in net assets 3,587,382 2,627,732
Net Assets
Beginning of period $ 3,750,378 $ 1,122,646
--------------- ---------------
End of period [including undistributed net investment income
of $68,951 and $28,588, respectively.] $ 7,337,760 $ 3,750,378
=============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Carl Domino Equity Income Fund
Financial Highlights
<S> <C> <C> <C>
For the periods ended October 31 1998 1997 1996 (b)
Selected Per Share Data
Net asset value, end of period $16.15 $12.03 $10.00
--------------- --------------- ---------------
Income from investment operations
Net investment income 0.21 0.19 0.16
Net realized and unrealized gain (loss) (0.60) 4.15 1.87
--------------- --------------- ---------------
Total from investment operations (0.39) 4.34 2.03
--------------- --------------- ---------------
Less Distributions
From net investment income (0.14) (0.22) -
From net realized gain (0.94) - -
--------------- ---------------
--------------- ---------------
Total distributions (1.08) (0.22) -
--------------- --------------- ---------------
Net asset value, end of period $14.68 $16.15 $12.03
Total Return (3.%7) 36.58% 20.(a)
Ratios and Supplemental Data
Net assets, end of period (000) $7,338 $3,750 $1,122
Ratio of expenses to average
net assets before expense reductions 1.53% 1.55% 1.(a)
Ratio of expenses to average net assets 1.50% 1.50% 1.(a)
Ratio of net investment income to average
net assets before expense reductions 1.33% 1.22% 1.(a)
Ratio of net investment income to average net assets 1.37% 1.28% 1.(a)
Portfolio turnover rate 75.95% 52.49% 62.(a)
<FN>
(a) Annualized
(b) For the period November 6, 1995 (commencement of operations) to October 31, 1998
</FN>
</TABLE>
<PAGE>
CARL DOMINO EQUITY INCOME FUND
Notes to Financial Statements
October 31, 1998
NOTE 1. ORGANIZATION
Carl Domino Equity Income Fund (the "Fund") is organized as a series of the
AmeriPrime Funds, an Ohio business trust (the "Trust"). The Trust is registered
under the Investment Company Act of 1940, as amended, as a diversified series,
open end management investment company. The investment objective of the fund is
to provide long-term growth of capital together with current income. The Trust
Agreement permits the Trustees to issue an unlimited number of shares of
beneficial interest of separate series without par value.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements.
Securities Valuations- Securities which are traded on any exchange or on
the NASDAQ over-the-counter market are valued at the last quoted sale price.
Lacking a last sale price, a security is valued at its last bid price except
when, in the Adviser's opinion the last bid price does not accurately reflect
the current value of the security. All other securities for which
over-the-counter market quotations are readily available are valued at their
last bid price. When market quotations are not readily available, when the
Adviser determines the last bid price does not accurately reflect the current
value or when restricted securities are being valued, such securities are valued
as determined in good faith by the Adviser, in conformity with guidelines
adopted by and subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Adviser believes such prices accurately reflect the fair market value of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith by the Adviser,
subject to review of the Board of Trustees. Short term investments in fixed
income securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
CARL DOMINO EQUITY INCOME FUND
Notes to Financial Statements
October 31, 1998
Federal Income Taxes- The Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.
Dividends and Distributions- The Fund intends to distribute substantially all of
its net investment income as dividends to its shareholders on an annual basis.
The Fund intends to distribute its net long term capital gains and its net short
term capital gains at least once a year.
Other- The Fund follows industry practice and records security transactions on
the trade date. The specific identification method is used for determining gains
or losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrual
basis. Discounts and premiums on securities purchased are amortized over the
life of the respective securities.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains Carl Domino Associates, L.P. (the "Adviser") to manage the
Fund's investments. The Adviser is a limited partnership organized in Delaware
and its general partner is Carl Domino, Inc. The controlling shareholder of Carl
Domino, Inc. is Carl Domino. Mr. Domino is primarily responsible for the day to
day management of the Fund's portfolio.
Under the terms of the management agreement, (the "Agreement"), the Adviser
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of the Fund except brokerage, taxes, interest, fees and
expenses of non-interested person trustees, and extraordinary expenses. The
Adviser is voluntarily reimbursing the Fund for trustees fees. There is no
assurance that such reimbursement will continue in the future. As compensation
for its management services and agreement to pay the Fund's expenses, the Fund
is obligated to pay the Adviser a fee computed and accrued daily and paid
monthly at an annual rate of 1.50% of the average daily net assets of the Fund.
It should be noted that most investment companies pay their own operating
expenses directly, while the Fund's expenses, except those specified above, are
paid by the Adviser. For the year ended October 31, 1998, the Adviser received a
fee of $85,109 from the Fund.
CARL DOMINO EQUITY INCOME FUND
Notes to Financial Statements
October 31, 1998
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -continued
The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator") 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 the year ended October 31, 1998, the Administrator received fees
of $30,000 from the Adviser for administrative services provided to the Fund.
The Fund retains AmeriPrime Financial Securities, Inc. (the Distributor) to act
as the principal distributor of Fund shares. There were no payments made to the
Distributor for the year ended October 31, 1998. Certain members of management
of the Administrator and the Distributor are also members of management of the
AmeriPrime Trust.
NOTE 4. CAPITAL SHARE TRANSACTIONS
As of October 31, 1998 there was an unlimited number of no par value shares
of capital stock authorized for the Fund. Paid in capital at October 31, 1998
was $7,133,946.
Transactions in capital stock were as follows: For the periods ended
October 31:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
1998 1998 1997 1997
Shares Dollars Shares Dollars
Shares sold 293,838 $4,543,530 165,650 $2,354,635
Shares issued in
reinvestment of
dividends 18,442 285,845 1,664 20,953
Shares redeemed
(44,714) (675,074) (28,359) (371,396)
-------- --------- -------- ---------
267,566 4,154,301 138,955 $2,004,192
</TABLE>
<PAGE>
CARL DOMINO EQUITY INCOME FUND
Notes to Financial Statements
October 31, 1998
NOTE 5. INVESTMENTS
For the period ended October 31, 1998, purchases and sales of investment
securities, other than short-term investments, aggregated $6,005,233 and
$4,206,319, respectively. The gross unrealized appreciation for all securities
totaled $818,695 and the gross unrealized depreciation for all securities
totaled $640,719 for a net unrealized appreciation of $177,976. The aggregate
cost of securities for federal income tax purposes at October 31, 1998 was
$7,092,376.
NOTE 6. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 7. RELATED PARTY TRANSACTIONS
The Adviser is not a registered broker-dealer of securities and thus does not
receive commissions on trades made on behalf of the Funds. 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 April 30, 1998, Carl Domino
Associates, L.P., and entities which the Adviser could be deemed to control or
have investment discretion over, owned in aggregate more than 25% of the Fund.
NOTE 8. Year 2000 Issue
Like other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by the Advisor, Administrator or Servicers do not properly process and
calculate date related information and data from and after January 1, 2000. This
is commonly known as the "Year 2000 Issue." The Advisor and Administrator have
taken steps that they believe are reasonably designed to address the Year 2000
Issue with respect to computer systems that are used and to obtain reasonable
assurances that comparable steps are being taken by each of the Fund's major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and Board of Trustees
Carl Domino Equity Income Fund
We have audited the accompanying statement of assets and liabilities of
Carl Domino Equity Income Fund (a member of the Ameriprime Fund series),
including the schedule of portfolio investments, as of October 31, 1998, and the
related statement of operations, the statement of changes in net assets, and
financial highlights for each of the periods indicated. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held by
the custodian as of October 31, 1998, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Carl
Domino Equity Income Fund as of October 31, 1998 and the results of its
operations, the changes in its net assets, and the financial highlights for each
of the periods indicated, in conformity with generally accepted accounting
principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
November 9, 1998
<PAGE>
Fountainhead Special Value Fund
Shareholder Letter
Dear Fellow Shareholders:
October 31, 1998 marked the completion of the Fountainhead Special Value Fund's
second year of operation. Since the Fund's inception on December 31, 1996, our
cumulative return is 27.44%. The annualized return for these 22 months is
14.12%.
1998 proved difficult for small- and mid-cap stocks. However, despite a trying
environment, Fountainhead performed relatively well, better than both the S&P
400 MidCap and the Russell 2000.
For the 1998 fiscal year, which ended October 31, the Fund returned (4.67)%,
compared to (11.86)% for the Russell 2000 and (6.70)% for the S&P 400 MidCap.
While negative returns are never a delight, we are confident that the future
looks rewarding for our holdings, and that the market will eventually realize
the value in small- and mid-cap stocks. This should lead to significant
appreciation over the long term. <TABLE> <CAPTION>
-----------------------------------------------------------------
Returns for the Periods Ended 10/31/98
-----------------------------------------------------------------
<S> <C> <C> <C>
Total Average Annual
Return Since Inception
Fund/Index 1 Year December 31, 1996
---------- ------ -----------------
Fountainhead Special Value Fund -4.67% 14.12%
S&P 400 MidCap -6.70% 17.22%
Russell 2000 -11.86% 3.59%
</TABLE>
Fountainhead
Special Value S&P Russell 2000
Year Fund $12,744 $13,387 $10,669
- -------------------------------------------------------------------------------
12/31/96 $ 10,000 $ 10,000 $ 10,000
1/31/97 $ 10,420 $ 10,375 $ 10,200
2/28/97 $ 10,830 $ 10,290 $ 9,952
3/31/97 $ 10,140 $ 9,852 $ 9,482
4/30/97 $ 9,860 $ 10,107 $ 9,509
5/31/97 $ 10,869 $ 10,991 $ 10,567
6/30/97 $ 11,560 $ 11,300 $ 11,021
7/31/97 $ 11,990 $ 12,419 $ 11,533
8/31/97 $ 11,860 $ 12,404 $ 11,797
9/30/97 $ 12,950 $ 13,117 $ 12,661
10/31/97 $ 13,370 $ 12,546 $ 12,105
11/30/97 $ 13,070 $ 12,732 $ 12,026
12/31/97 $ 13,665 $ 13,226 $ 12,237
1/31/98 $ 13,433 $ 12,975 $ 12,043
2/28/98 $ 14,757 $ 14,050 $ 12,933
3/31/98 $ 15,910 $ 14,684 $ 13,466
4/30/98 $ 16,476 $ 14,951 $ 13,540
5/31/98 $ 15,758 $ 14,278 $ 12,810
6/30/98 $ 16,232 $ 14,368 $ 12,837
7/31/98 $ 15,424 $ 13,811 $ 11,798
8/31/98 $ 11,976 $ 11,241 $ 9,506
9/30/98 $ 12,229 $ 12,291 $ 10,251
10/31/98 $ 12,744 $ 13,387 $ 10,669
The chart shows the value of a hypothetical initial investment of $10,000 in the
Fund, the S&P 400 MidCap Index and the Russell 2000 Index on December 31, 1996
and held through October 31, 1998. The S&P 400 MidCap Index and the Russell 2000
Index are widely recognized unmanaged indices of common stock prices.
Performance figures include the change in value of the stocks in the indices,
reinvestment of dividends, and are not annualized. The index returns do not
reflect expenses, which have been deducted from the Fund's return. THE FUND'S
RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF FUTURE RESULTS.
Thus, our performance was in between the small- and mid-cap indices, which could
generally be expected for a fund with a mix of small- and mid-cap stocks.
In 1998, most mutual-fund returns were highly correlated with the market
capitalization of the stocks in which they invested, as well as their investment
style (e.g., value versus growth). The turbulent 1998 market shifts had an
enormous magnifying impact on investment-fund returns.
Common Equity Unweighted Price Performance
(YTD as of 10-31-98)
By Capitalization Unweighted Performance
< $250 million (27.60)%
$250 million - $2 billion (21.75)%
$2 billion - $5 billion (11.39)%
$5 billion - $20 billion (0.61)%
> $20 billion 13.36%
Courtesy: Salomon Smith Barney
The Fountainhead Special Value Fund had a stellar performance during the first
three quarters of fiscal 1998, with share net asset value increasing 23%.
However, the violent sell-off in August, September, and early October caused our
Fund to give up all the gain achieved earlier in the year.
Key questions asked by investors are what caused the market downturn and why
small- and mid-cap stocks were hurt much more than large-caps.
The initial market drop was precipitated when the Russian government signaled
that it would default on its debt obligations, thus beginning the toppling of a
long line of financial dominoes. Successive waves of selling--first foreign
securities, then US securities--by hedge funds and mutual funds scrambling for
liquidity fed the panic which swept world markets already wrestling with the
Asian contagion. Further panic resulted from the implosion of the giant
Long-Term Capital Management hedge fund.
As some of America's most respected banks and brokerage houses reported major
losses from trading and hedge-fund loans, investors began to fear a financial
meltdown. Mutual funds investing in foreign securities, forced to meet
redemptions, were unable to sell many foreign securities and thus were compelled
to dump their other bonds and stocks (primarily U.S. holdings), further driving
down prices.
The result was a massive flight to liquidity, replacing the earlier irrational
exuberance with irrational fear. Not knowing the extent of the global problems,
investors shifted funds to the most liquid securities, US Treasury bonds and
large-cap stocks.
Small- and mid-cap stocks were sold off at fire-sale levels. As indicated in the
chart below, by October 31 the average NASDAQ stock was down 43.7% from its
52-week high, and the average NYSE stock was down 31.6%.
Common Equity Decline from 52-Week High
(YTD as of 10-31-98)
Average % Down % Down % Down
Decline 10%+ 20%+ 30%+
NASDAQ 43.7% 94.4% 84.7% 69.4%
NYSE 31.6% 85.9% 67.8% 47.5%
S&P 500 22.6% 76.2% 51.2% 29.6%
Courtesy: Salomon Smith Barney
During this time of investor disarray, we remained committed to our investment
philosophy. We did not sell stocks just because they declined, nor did we join
the stampede to highly liquid large-cap securities.
Since our portfolio consists of stocks carefully screened by our long-time
investment criteria, we felt confident that our undervalued stocks would bounce
back. After the market bottom of October 8, the Fund's net asset value made a
major recovery as markets were reassured by Federal Reserve actions and other
positive developments.
It is important to emphasize that regardless of market conditions, we will
continue to adhere to our long-term investment style, which includes three buy
criteria.
The first element includes stocks selling well below their estimated
private-market value, defined as what these companies are worth to a strategic
or financial buyer as a going business. Second, we buy stocks of companies
selling at significant discounts to their projected EPS growth rates. Finally,
we invest in stocks selling at low valuation multiples, such as
price-to-earnings or price-to-book, but which have sound fundamentals.
Our portfolio includes securities meeting these rigorous tests and offering
extraordinary value.
Included with this report is a capsule description of the securities held by
your Fund at the end of the fiscal year.
1998 Achievements
Fund assets increased from $2.6 million to $6.6 million.
The Fund experienced positive cash inflows (i.e., more new buyers than
sellers) in every month during fiscal 1998.
Shareholders had no liability for capital-gains tax.
In summary, while fiscal 1998 was a difficult year for most small- and mid-cap
mutual funds (including Fountainhead), we are quite pleased with our performance
since the market bottom on October 8, and we believe we are well-positioned for
an excellent 1999. This optimism is indicated by the fact that all our
investment team and key administrative staff are shareholders in the Fund.
Sincerely,
Roger E. King
Chairman and President
<PAGE>
Highlights of Selected Fountainhead Holdings
as of October 31, 1998
Banks
Riggs National Corp. - RIGS is a multi-bank holding company based in
Washington, DC involved in a variety of banking-related activities through
its subsidiaries. RIGS operates in Washington, DC; New Haven, Connecticut;
Miami, Florida; London, England; Paris, France; and Nassau, Bahamas. The
Company also provides domestic investment-advisory services.
Broadcasting/Cable
Cablevision Systems Corporation - CVC owns and operates cable-TV systems in
eighteen states, with operations in Boston, Cleveland, and metropolitan New
York. The Company also manages entertainment, news, and sports programming;
owns a majority interest in Madison Square Garden; and manages the operations
of Radio City Music Hall.
Century Communications - Class A - CTYA, one of the ten largest cable
operators in the United States, owns, operates, and manages 72 cable TV
systems in 25 states and Puerto Rico. The Company also owns and operates
cellular-telephone systems throughout the United States.
MediaOne Group, Inc. - UMG, formerly US WEST Media Group, is a broadband
communications company. The Company provides the use of broadband
communications and the Internet to customers in the United States, Europe,
and Asia. UMG holds interests in wireless communications businesses outside
the United States.
Paxson Communications, Inc. - PAX owns and operates a nationwide network of
73 owned, operated, and affiliated TV stations. PAX recently launched its
PaxNet(C) family entertainment network; its schedule consists of shows like
Touched by an Angel, Promised Land, Dr. Quinn, Medicine Woman, Life Goes On,
I'll Fly Away, and Christy.
Consumer Goods: Foods
Opta Foods Ingredients, Inc. - OPTS develops, makes, and market proprietary
food ingredients to consumer food companies and food-service companies. The
Company's products improve food's nutritional content, healthfulness,
texture, and taste. OPTS' food ingredients are used by more than 150 food
companies, including five of the ten largest US consumer packaged-food
companies and three of the world's largest quick-service restaurant chains.
Health-Care Services
Capital Senior Living Corp. - CSU, one of the country's largest developers
and operators of senior living communities, currently operates in 33
communities in seventeen states. The Company's operating philosophy
emphasizes a continuum of care, which integrates independent living, assisted
living, and personal care to provide residents the opportunity to age in
place.
Integrated Health Services, Inc. - IHS is the fourth largest home-health
company and the fifth largest long-term care company, operating 1,000 service
locations, 77 of which contain medical specialty units, in forty states. The
Company has undergone a significant shift in the past year to home-health
from sub-acute and long-term care, trying to become a leading post-acute
provider with networks of home-health agencies, specialty post-acute medical
units, and long-term care facilities.
Insurance
American Bankers Insurance Group, Inc. - ABI provides specialty
credit-related insurance products, including credit unemployment, accidental
death and dismemberment, disability, property, and life insurance. The
Company's products are primarily sold through financial institutions and
other entities providing consumer financing in the United States, Canada, the
United Kingdom, Latin America, and the Caribbean.
Medical Devices
Respironics, Inc. - RESP is a leading designer, manufacturer, and marketer of
technologically advanced medical devices for use in home, hospital, and
alternative clinical-care settings. In addition to therapy products for
obstructive sleep apnea and portable ventilation, the Company's major product
lines include monitoring devices for newborns, sleep diagnostics, and a
variety of products for the treatment of respiratory disorders, including
asthma-management devices.
St. Jude Medical, Inc. - STJ, the world's largest manufacturer of mechanical
heart valves, serves physicians worldwide with cardiovascular and vascular
products. The Company's products include prosthetic heart valves, vascular
grafts, an intra-aortic balloon pump system, a centrifugal blood-pump system,
and cardiac rhythm-management products. The Company has great franchise value
as the #1 or #2 player in all its markets.
Savings & Loans
Astoria Financial Corp. - ASFC ranks as the second largest publicly traded
thrift in New York and the sixth largest in the country, with more than $18
billion in assets. ASFC provides retail banking, mortgages, and consumer-loan
services to more than 700,000 customers, and originates mortgage loans
through extensive broker networks and loan-production offices.
Telecommunications
Alltel Corp. - AT provides wireline local, long-distance, network access
and Internet services, wireless communications, wide-area paging service and
information-processing management services, and advanced applications software.
Clearnet Communications, Inc. -CLNTF operates enhanced specialized mobile
radio, a digital wireless service. The Company provides the ability to
integrate enhanced dispatch, mobile telephone, text messaging with
acknowledgment paging, and mobile data services. CLNTF, which provides analog
dispatch services across Canada, operates a multi-location mobile
communications retailer.
Nextel Communications, Inc. - NXTL provides digital and analog
wireless-communications services to its US customers under the Nextel(C) name.
NXTL provides specialized mobile-radio wireless-communications services in the
United States and Hawaii.
Rural Cellular Corp. - RCCC provides wireless telecommunications in
selected markets in Maine, Minnesota, North Dakota, South Dakota, and Wisconsin.
Western Wireless Corp. - WWCA, a leading provider of wireless-communications
services in the western United States, offers cellular service under the
Cellular One name in seventeen states. As a result of the Company's combined
cellular and PCS licenses, as well as its joint ventures, WWCA provides
service covering 59% of the continental United States.
<PAGE>
<TABLE>
<CAPTION>
Fountainhead Special Value Fund
Schedule of Investments - October 31, 1998
<S> <C> <C>
Common Stocks - 92.7% Shares Value
Banks and Bank Holding Companies - 1.7%
Riggs National Corp. 4,600 110,975
----------------
Broadcasting - 9.7%
Cablevision Systems (a) 8,000 386,000
Mediaone Group Inc. 1,400 59,238
Paxson Communications Corp. (a) 24,000 201,000
----------------
646,238
----------------
Communications - 14.7%
Alltel Corp. 3,404 159,350
Clearnet Communications Inc. (a) 31,500 230,344
Nextel Communications, Inc. (a) 14,900 270,063
Rural Cellular Corp (a) 15,400 184,800
Western Wireless Corp.(a) 6,400 129,600
----------------
----------------
974,157
----------------
Drugs - 2.7%
Dura Pharmaceuticals, Inc. (a) 14,900 179,731
----------------
Financial Services - 3.7%
Arcadia Financial Ltd. (a) 30,000 125,625
Astoria Financial Corp. 2,760 118,680
----------------
----------------
244,305
----------------
Food - 3.1%
Opta Food Ingredients Inc. (a) 50,000 203,125
----------------
Healthcare & Healthcare Services - 15.1%
Capital Senior Living Corp. (a) 10,000 117,500
Integrated Health Services 18,000 291,375
Mariner Health Corp. (a) 53,600 311,550
Sun Healthcare Group (a) 48,000 282,000
----------------
----------------
1,002,425
----------------
Insurance - 8.8%
American Bankers Insurance Group 11,000 491,563
Amerin Corp. (a) 4,300 91,912
----------------
----------------
583,475
----------------
Media & Leisure - 9.8%
Century Communications-Class A 29,500 652,687
----------------
Medical Devices - 9.0%
Respironics, Inc. (a) 19,500 301,030
St. Jude Medical Inc. (a) 10,400 293,800
----------------
----------------
594,830
----------------
Oil & Gas Services - 7.1%
R & B Falcon Corp. (a) 17,200 233,275
Santa Fe International Corp. 13,000 239,687
----------------
----------------
472,962
----------------
Oil & Gas Exploration & Production - 2.6%
Nuevo Energy Co. (a) 8,200 173,738
----------------
Technology - 4.7%
Cabletron Systems (a) 27,300 310,538
----------------
TOTAL COMMON STOCKS (Cost $6,439,696) 6,149,186
----------------
Money Market Securities - 6.3% Principal Amount
Star Treasury, 4.92%, 11/2/98 (Cost $419,228) $419,228 419,228
----------------
TOTAL INVESTMENTS - 99.0% (Cost $6,858,924) 6,568,414
Liabilities less other assets - 1.0% 68,906
----------------
Total Net Assets - 100.0% $ 6,637,320
================
<FN>
Legend
(a) non-income producing
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fountainhead Special Value Fund October 31, 1998
Statement of Assets & Liabilities
<S> <C> <C>
Assets
Investment in securities, at value (Cost $6,858,924) $ 6,568,414
Receivables:
Investments sold 68,375
Subscriptions 4,516
Dividends 705
Interest 1,617
--------------------
Total assets 6,643,627
Liabilities
Accrued investment advisory fee payable $ 6,301
Other payables and accrued expenses 6
------------------
Total liabilities 6,307
--------------------
Net Assets $ 6,637,320
====================
Net Assets consist of:
Paid in capital $ 6,944,468
Accumulated undistributed net realized gain (16,638)
Net unrealized appreciation on investments (290,510)
--------------------
Net Assets, for 526,479 shares $ 6,637,320
====================
Net Asset Value
Net Assets
Offering price and redemption price per share ($6,637,320/526,479) $ 12.61
====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fountainhead Special Value Fund
Statement of Operations for the year ended October 31, 1998
<S> <C> <C>
Investment Income
Dividend Income $ 6,894
Interest Income 23,052
-----------------
Total Income 29,946
Expenses
Investment advisory fee 63,759
Administration fees 30,000
Transfer agent fees 15,926
Pricing & bookkeeping fees 11,598
Legal fees 5,532
Custodian fees 6,329
Audit fees 899
Registration fees 12,295
Shareholder reports 6,180
Trustees' fees 780
Miscellaneous 1,750
--------------
Total operating expenses before reimbursement 155,048
Reimbursed expenses (87,661)
--------------
Total operating expenses 67,387
-----------------
Net Investment Income (Loss) (37,441)
-----------------
Realized & Unrealized Gain (Loss)
Net realized gain (loss) on investment securities (188)
Change in net unrealized appreciation(depreciation) on investment securities (655,499)
-------------
Net gain (loss) on investment transactions (655,687)
-----------------
Net increase in net assets resulting from operations $ (693,128)
=================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fountainhead Special Value Fund
Statement of Changes in Net Assets
<S> <C> <C>
For the year For the
ended period ended
Increase/(Decrease) in Net Assets October 31, 1998 October 31, 1997 (a)
Operations
Net investment (loss) $ (37,441) $ (1,544)
Net realized gain (loss) (188) 19,269
Change in net unrealized appreciation (depreciation) (655,499) 364,989
------------------ ------------------
Net Increase in net assets resulting from operations (693,128) 382,714
------------------ ------------------
Distributions to shareholders:
From net investment income - -
From net realized gain (34,177) -
------------------ ------------------
Total distributions (34,177) -
------------------ ------------------
Share Transactions
Net proceeds from sale of shares 4,888,881 2,274,079
Shares issued in reinvestment 34,164 -
Shares redeemed (187,621) (27,592)
------------------ ------------------
Net increase in net assets resulting
from share transactions 4,735,424 2,246,487
------------------ ------------------
Total increase in net assets 4,008,119 2,629,201
Net Assets
Beginning of period 2,629,201 -
------------------ ------------------
End of period [including undistributed net investment loss of
($37,441) and ($1,544), respectively. $ 6,637,320 $ 2,629,201
================== ==================
<FN>
(a) December 31, 1996 (commencement of operations) to October 31, 1997
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fountainhead Special Value Fund
Financial Highlights
<S> <C> <C>
For periods ended October 31 1998 1997 (c)
Selected Per Share Data
Net asset value, beginning of period $ 13.35 $ 10.00
============ =============
Income from investment operations
Net investment income (0.09) (0.02)
Net realized and unrealized gain (loss) (0.51) 3.37
------------ -------------
Total from investment operations (0.60) 3.35
------------ -------------
Less Distributions
From net interest income - -
From net realized gain (0.14)
------------
------------ -------------
Total distributions (0.14)
------------ -------------
Net asset value, end of period $ 12.61 $ 13.35
============ =============
Total Return (4.67)% 40.(a)
Ratios and Supplemental Data
Net assets, end of period (000) $6,637 $2,629
Ratio of expenses to average net assets 1.(a)(b) 0.(a)
Ratio of expenses to average net assets
before reimbursement 2.(a)(b) 8.(a)
Ratio of net investment income to
average net assets after reimbursement (0.(a)% (0.(a)%
Ratio of net investment income to average
net assets before reimbursement (2.(a)% (7.(a)%
Portfolio turnover rate 108.(a) 130.(a)
<FN>
(a) Annualized
(b) For the period November 1, 1997 to October 31, 1998 the fund's advisor
agreed to reimburse expenses (c) December 31, 1996 (commencement of
operations)to October 31, 1998
</FN>
</TABLE>
<PAGE>
FOUNTAINHEAD SPECIAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
NOTE 1. ORGANIZATION
The Fountainhead Special Value Fund. (the "Fund") is organized as a series of
the AmeriPrime Funds, an Ohio business trust (the "Trust"). The Trust is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Funds investment
objective is to provide long term capital growth. The Trust Agreement permits
the trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuation- Securities which are traded on any exchange or on the
NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking
a last sale price, a security is valued at its last bid price except when, in
the Advisor's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, when the Advisor determines the
last bid price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, in conformity with guidelines adopted by and subject to
review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Advisor believes such prices accurately reflect the fair market values of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. 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 of Trustees. Short term investments in fixed
income securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
FOUNTAINHEAD SPECIAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
Federal Income Taxes- The Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.
Dividends and Distributions- The Fund intends to distribute substantially all of
its net investment income as dividends to its shareholders on an annual basis.
The Fund intends to distribute its net long term capital gains and its net short
term capital gains at least once a year.
Other- The Fund follows industry practice and records security transactions on
the trade date. The specific identification method is used for determining gains
or losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrual
basis. Discounts and premiums on securities purchased are amortized over the
life of the respective securities.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains King Investment Advisors, Inc. (the "Advisor") to manage
the Fund's investments. Roger King, President of the Advisor, is primarily
responsible for the day to day management of the Fund's portfolio.
Under the terms of the management agreement, (the "Agreement"), the Advisor
manages the Fund's investments subject to approval of the Board of Trustees. As
compensation for its management services the Fund is obligated to pay the
Advisor a fee computed and accrued daily and paid monthly at an annual rate of
1.25% of the average daily net assets of the Fund. For the period from November
1, 1997 through October 31, 1998, the Advisor has received a fee of $63,759 from
the Fund. The Advisor is voluntarily reimbursing certain Fund expenses. There is
no assurance that such reimbursement will continue in the future.
The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator") to
manage each Fund's business affairs and to provide each Fund with administrative
services, including all regulatory reporting and necessary office equipment and
personnel. For the year ended October 31, 1998, the Administrator received fees
of $25,000 from the Advisor for administrative services provided to each Fund.
FOUNTAINHEAD SPECIAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued
The Fund retains AmeriPrime Financial Securities, Inc. (the "Distributor") to
act as the principal distributor of each Fund's shares. There were no payments
made to the Distributor for the year ended October 31, 1998. Certain members of
management of the Administrator and the Distributor are also members of
management of the AmeriPrime Trust.
NOTE 4. CAPITAL SHARE TRANSACTIONS
As of October 31, 1998 there was an unlimited number of no par value shares
of capital stock authorized for the Fund. Paid in capital at October 31, 1998
was $6,981,909.
Transactions in capital stock were as follows:
For the periods ended October 31:
<TABLE>
<S> <C> <C> <C> <C>
1998 1998 1997 1997
Shares Dollars Shares (a) Dollars (a)
Shares sold 341,534 $4,888,881 199,337 $2,274,079
Shares issued in
reinvestment of
dividends 2,614 34,164
Shares redeemed
(14,634) (187,621) (2,375) (27,592)
-------- --------- ------- --------
329,514 $4,735,424 196,962 $2,246,487
<FN>
(a) For the period December 31, 1996 (commencement of operations) to October 31,
1997.
</FN>
</TABLE>
NOTE 5. INVESTMENTS
For the period from November 1, 1997 through October 31, 1998, purchases and
sales of investment securities, other than short-term investments, aggregated
$10,724,465 and $6,132,252, respectively. The gross unrealized appreciation for
all securities totaled $682,683 and the gross unrealized depreciation for all
securities totaled $973,193 for a net unrealized depreciation of $290,510. The
aggregate cost of securities for federal income tax purposes at October 31, 1998
was $6,858,924.
FOUNTAINHEAD SPECIAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
NOTE 6. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 7. RECLASSIFICATIONS
In accordance with SOP 93-2, the fund has recorded a reclassification in the
capital accounts. As of October 31, 1998 the fund recorded permanent book/tax
differences of $37,441 from undistributed net investment income to paid in
capital. This reclassification has no impact on the net asset value of the fund
and is designed generally to present undistributed income and realized gains on
a tax basis which is considered to be more informative to shareholders.
NOTE 8. Year 2000 Issue
Like other mutual funds, financial and business organizations and individuals
around the world, the fund could be adversely affected if the computer systems
used by the advisor, administrator and servicers do not properly process and
calculate date related information and data from and after January 1, 2000. This
is commonly known as the "Year 2000 Issue." The advisor and administrator have
taken steps that they believe are reasonably designed to address the Year 2000
issue with respect to computer systems that are used and to obtain reasonable
assurances that comparable steps are being taken by each of the Fund's major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and Board of Trustees
Fountainhead Special Value Fund
We have audited the statement of assets and liabilities including the portfolio
of investments, of the Fountainhead Special Value Fund (a member of the
Ameriprime Fund Series) as of October 31, 1998, and the related statement of
operations, the statement of changes in net assets, and the financial highlights
for each of the periods indicated. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1998, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting prin-
ciples used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fountainhead Special Value Fund as of October 31, 1998 and the results of its
operations, the changes in its net assets and the financial highlights for each
of the periods indicated in conformity with generally accepted accounting
principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
November 9, 1998
<PAGE>
Dear Fellow Shareholders:
Investment Results - Fiscal Year Ended October 1998
The GLOBALT Growth Fund (the "Fund") ended its third October fiscal year with a
13.28% total return for the year. The Fund has returned 79.76% (net of fees)
since inception December 1, 1995. Please note that the Fund will pay a dividend
on December 28, 1998.
Growth of $25,000
Russell
Period GGF S&P 500 1000 Growth
- ------------------------- ------------ ------------
Beginning 12/1/95
$25,000 $25,000 $25,000
Dec-95 $26,600 $25,483 $25,143
Jan-96 $27,600 $26,349 $25,984
Feb-96 $28,199 $26,594 $26,460
Mar-96 $28,549 $26,849 $26,495
Apr-96 $29,074 $27,244 $27,190
May-96 $29,400 $27,947 $28,142
Jun-96 $29,400 $28,053 $28,180
Jul-96 $28,074 $26,813 $26,537
Aug-96 $28,871 $27,379 $27,217
Sep-96 $30,647 $28,920 $29,198
Oct-96 $31,195 $29,718 $29,372
Nov-96 $33,295 $31,965 $31,577
Dec-96 $31,913 $31,332 $30,966
Jan-97 $33,914 $33,289 $33,133
Feb-97 $33,052 $33,550 $32,908
Mar-97 $31,558 $32,172 $31,128
Apr-97 $33,862 $34,092 $33,195
May-97 $35,836 $36,168 $35,597
Jun-97 $37,506 $37,788 $37,025
Jul-97 $40,773 $40,795 $40,303
Aug-97 $39,077 $38,510 $37,947
Sep-97 $40,902 $40,619 $39,814
Oct-97 $39,663 $39,262 $38,343
Nov-97 $40,424 $41,080 $39,967
Dec-97 $41,063 $41,785 $40,415
Jan-98 $41,342 $42,247 $41,623
Feb-98 $44,377 $45,294 $44,753
Mar-98 $46,382 $47,613 $46,539
Apr-98 $47,663 $48,092 $47,181
May-98 $46,466 $47,266 $45,841
Jun-98 $48,859 $49,186 $48,651
Jul-98 $48,219 $48,662 $48,330
Aug-98 $40,533 $41,626 $41,076
Sep-98 $42,203 $44,293 $44,231
Oct-98 $44,929 $47,894 $47,787
Past performance is not predictive of future performance.
The GLOBALT Growth Fund's historical results are net of all
expenses, versus the gross market benchmarks (the S&P 500
Index and the Russell 1000 Growth Index). Investors are
reminded that when trying to achieve benchmark returns,
investment management fees, transaction costs and execution
costs will be incurred.
The S&P 500 Index is an unmanaged index of 500 selected
common stocks, most of which are listed on the New York Stock
Exchange. The Index is adjusted for dividends and weighted
toward stocks with large market capitalizations. The Russell
1000 Growth Index is an unmanaged index of 1000 selected
"growth" oriented common stocks, most of which are listed on
the New York Stock Exchange. The Index is adjusted for
dividends and weighted toward stocks with large market
capitalizations.
Inception Date: December 1, 1995.
From a standing start on December 1, 1995, the Fund ended October 1998 with
$11,704,050 in net assets and more than 80 shareholders. We welcome our new
shareholders and look forward to furthering the investment objectives of all our
shareholders. We believe it is important to note that all GLOBALT 401(k) plan
participants have elected to be investors in the Fund.
Investment Approach
To review, our approach to managing the GLOBALT Growth Fund is to achieve
long-term growth of capital by investing in U.S. companies which we believe
offer superior growth potential through exposure to rapidly growing foreign
markets. The Fund only invests in stocks of U.S. companies that are expected to
derive at least 20% of their revenues outside the U.S. Once we construct
portfolios, the connection you have to the global marketplace, by being an
investor in the GLOBALT Growth Fund, is much greater: the portfolio derives at
least 40% of revenues from outside the U.S. GLOBALT's investment team seeks to
optimize the Fund's exposure to the best global opportunities.
Performance Review
The period that just ended was difficult for all equity managers. Developments
around the world exerted such pressure on markets that the month of August was
the worst August for investors in over 70 years. We continue to invest in
high-quality, strong U.S. companies and will use the market volatility to take
advantage of attractive investment opportunities as they present themselves.
While the Fund trailed the benchmarks for the fiscal year, we believe we have
the best opportunity since we established GLOBALT to identify those companies
that can grow through these challenging times.
Commentary and Outlook
Update on the Year 2000 Issue
GLOBALT continues to actively and aggressively monitor the Year 2000 compliance
initiatives and subsequent progress of companies we own or may potentially own.
We feel confident that our ongoing efforts should help decrease the risk to the
Fund by being aware of potential negative consequences our companies may face in
their transition to the new millenium.
Has the World Order Really Changed?
The turmoil in emerging markets around the globe is indeed significant, and with
respect to Asia, unprecedented. (Uncertainty in Russia and Latin America is not
new.) However, useful investment perspective on the economic state of affairs
has been woefully lacking.
Much of the information being disseminated comes from the evening news, where
press accounts have been sensationalized for the sake of headlines and
expediency. Events are often presented as having equal importance or gravity,
with little distinction between economic and political importance. For example,
Russia (2.7% of world GDP) inspired as much fear as Asia (nearly 26% of world
GDP) after 14 months in the news.
But, has the world order really changed? More specifically, have opportunities
for U.S. companies operating in international markets changed substantially or
merely situationally? We endeavor each day to develop and reassess an
independent point of view that incorporates hard reality, but avoids
conventional wisdom and a herd mentality. This is what we conclude:
1. U.S./global companies grow faster
U.S. companies with significant international revenues (exports and/or
foreign-based operations) still grow faster than domestic-only companies
(international operations still add to revenues, not subtract) although at
a cyclically lower rate currently.
2. U.S./global companies dominate world markets
U.S. multi-nationals (GLOBALT global growers) dominate world markets in
numerous sectors, e.g., capital goods, pharmaceuticals, software,
entertainment. They sell technologically advanced, productivity-enhancing
or non-duplicable products that are essential or highly desired - and in
many cases, the leads these companies enjoy are likely to increase because
they outspend competitors in research, product development, marketing and
distribution. Their positions are further enhanced by access to abundant
low cost capital.
3. U.S. domestic-only companies are not immune
The notion that domestic companies are immune from "contagion" is simply
fallacious. Events in Asia have demonstrated conclusively that all the
world economies are irrevocably interdependent. A compelling illustration
is the flood of imports entering the U.S. markets from Asian countries
trying to earn hard currency, eroding the volume and pricing structure of
domestic products in the process.
4. U.S. equity market and U.S. dollar are preferred worldwide
The U.S. equity market, with its unmatched liquidity and well-regulated
trading, is the market of choice worldwide. The strong U.S. currency is the
critical element that assures this. With the decline of Japan, there is no
other significant reserve currency in the world. Upheavals in other regions
of the world invariably prompt a "flight to safety" to broad, dollar
denominated markets.
5. U.S. global companies seize opportunities
The best and most opportunistic companies (the core GLOBALT names) use
times like these to gain market share and buy facilities and businesses
overseas at bargain prices. We have systematically tracked these
investments by major U.S. companies, and their cumulative effect over
several years will be measurable.
6. The developing world will grow faster
The long-term, secular growth rate of the Rest of the World (ROW) remains
greater than the U.S.
7. GLOBALT thoroughly researches company specific global data
The GLOBALT strategy does not generalize "globalization". It is highly
specific as to economic sectors, geographic regions, markets served and
individual companies.
8. GLOBALT's "New Growth" database points us in the right direction
GLOBALT's New Growth Universe (proprietary database) enables our analysts
and portfolio managers to make effective tactical shifts in portfolio
composition - e.g., away from given emerging markets toward Western Europe.
Investment Conclusion
Events in emerging markets are giving U.S. companies and world central banks
their strongest test in recent times and it is not over yet. However, the pieces
are gradually sorting themselves out, with long-term winners and losers more
clearly revealed. While business for many companies is slowing cyclically - in
most instances moderately - the winners will experience leveraged or magnified
recoveries; i.e., faster future growth. Some of their competitors are weakened
or gone, industries are consolidating into more stable business environments,
acquisition opportunities are more available at better prices, and U.S.
companies sourcing abroad in local currencies are seeing their costs lowered
dramatically. It is still a global economy, and this is the best opportunity
GLOBALT has had to evaluate management capabilities and build powerful
portfolios for the 21st century.
As always, your questions and comments are welcome. We appreciate your
confidence in the GLOBALT Growth Fund.
Sincerely,
Angela Z. Allen
President and Chief Executive Officer
Fund Investment
Shares of the Fund are sold on a continuous basis.
Through the Fund's transfer agent, Unified Fund Services, you may invest any
amount you choose as often as you wish, subject to a minimum initial investment
of $25,000 and minimum subsequent investments of $5,000 ($2,000 for IRA
accounts) by calling 1-877-BUY-GROWX (877-289-4769). Shares may also be
purchased through a broker dealer or other financial institution authorized by
the Fund's distributor (investors may be charged a fee for this service).
Purchases can be made by mail or by bank wire (please see prospectus for more
information).
The Fund is available through the following brokers' no fee transaction
programs: J.C. Bradford & Co., Interstate Johnson Lane, NBC Securities,
Pacific-American Securities LLC and Jack White & Co.
The Fund is also available through Fidelity's FUNDSNetwork with a minimum
investment of $2,500 ($1,000 through a qualified retirement plan). It is listed
as GLOBALT Growth Fund (symbol: GROWX). Fidelity can be reached at
1-800-544-9697.
The Fund is also available through the Schwab Mutual Fund OneSource service at
1-800-435-4000 or on the Internet at www.schwab.com. The minimum investment in
the Fund through this service is $2,500 ($1,000 through a qualified retirement
plan). The GLOBALT Growth Fund's mutual fund symbol at Schwab is GROWX.
The GLOBALT Growth Fund may be made available as an investment option in 401(k)
plans custodied at any broker listed above.
<PAGE>
<TABLE>
<CAPTION>
GLOBALT Growth Fund
Schedule of Investments - October 31, 1998
<S> <C> <C>
Common Stock - 91.5% Shares Value
Business Equipment & Services - 8.2%
Eastman Kodak 4,500 $ 348,750
Minnesota Mining & Manufacturing, Inc. 4,000 320,000
Omnicom Group 5,800 286,738
---------------
---------------
955,488
---------------
Capital Goods - 8.8%
General Electric Co. 6,200 542,500
General Telephone Corp. 8,300 487,106
---------------
---------------
1,029,606
---------------
Chemicals - 2.3%
Monsanto Co. 6,700 272,188
---------------
Consumer Non-Durables - 8.9%
Coca Cola Company 2,450 165,681
Coca Cola Enterprises 6,800 245,225
Gillette Co. 8,000 359,500
Procter & Gamble Co. 3,100 275,513
---------------
1,045,919
---------------
Consumer Services - 4.7%
Service Corp. International 5,400 192,375
Time Warner Inc. 3,900 361,969
---------------
---------------
554,344
---------------
Energy Sector - 5.1%
Exxon Corp. 2,900 206,625
Halliburton Co. 10,900 391,719
---------------
---------------
598,344
---------------
Financial Services - 8.5%
American Express 4,300 380,012
American International Group 3,362 286,610
Fanklin Resources Inc. 4,400 166,375
Marsh & McLennan Co. 2,900 160,950
---------------
993,947
---------------
Health Care - 19.5%
Baxter International Inc. 7,100 425,556
Becton Dickinson 7,800 328,575
Bristol Myers Squibb 2,200 243,237
Guidant Corp. 4,400 336,600
Johnson & Johnson 3,812 310,678
Lilly Eli & Co. 5,300 428,969
Pfizer Inc. 1,900 203,894
---------------
2,277,509
---------------
GLOBALT Growth Fund
Schedule of Investments - October 31, 1998 - continued
Common Stock - continued
Technology Sector - 23.4% Shares Value
Cicso Systems Inc. (a) 2,962 $ 186,606
Compaq Computer Corp. 7,800 246,675
Computer Sciences 5,300 279,575
Emerson Electric Co. 3,300 217,800
International Business Machines, Inc. 2,700 400,781
Microsoft Corp. (a) 2,900 307,038
Oracle Corp. (a) 7,600 224,675
Seagate Technology Inc. 6,300 166,163
Sun Microsystems (a) 5,600 326,200
Xerox Corp. 3,900 377,812
---------------
2,733,325
---------------
Transportation - 2.1%
AMR Corp.(a) 3,700 247,900
---------------
Total Common Stock - (Cost $9,379,538) 10,708,570
---------------
Money Market Securities - 6.3%
Star Treasury - 4.96% 11/2/98 (Cost $743,064) $ 743,064 $ 743,064
---------------
TOTAL INVESTMENTS - (Cost $10,122,602) - 97.8% 11,451,634
===============
---------------
Other assets less liabilites - 2.2% 257,474
---------------
Total Net Assets - 100.0% $ 11,709,108
===============
<FN>
(a) non-income producing
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GLOBALT Growth Fund
Statement of Assets and Liabilities
October 31, 1998
<S> <C> <C>
Assets
Investment in securities, at value (cost $10,122,602) $ 11,451,634
Receivables:
Securities sold 258,926
Dividends 5,708
Interest 2,958
Reimbursement of trustees fees 1,844
--------------------
Total assets 11,721,070
Liabilities
Payables:
Accrued advisory fee $ 10,207
Accrued trustees' fees 1,755
--------------
Total liabilities 11,962
--------------------
Net Assets $ 11,709,108
====================
Net Assets consist of:
Paid in capital $ 9,775,155
Accumulated undistributed net investment income 12,698
Accumulated undistributed net realized gain 592,223
Net unrealized appreciation on investments 1,329,032
--------------------
Net Assets, for 725,607 shares $ 11,709,108
====================
Net Asset Value
Net Assets
Offering price and redemption price per share ($11,707,264/725,607) $ 16.14
====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GLOBALT Growth Fund
Statement of Operations for the year ended October 31, 1998
<S> <C> <C>
Investment Income
Dividend Income $ 102,053
Interest Income 35,171
-------------------
Total Income 137,224
Expenses
Investment advisory fee $ 122,484
Trustee's fees 1,844
----------------
Total Expenses before reimbursement 124,328
Reimbursed trustees fees (1,844)
----------------
Total operating expenses 122,484
-------------------
Net Investment Income 14,740
-------------------
Realized & Unrealized Gain
Net realized gain on investment securities 687,055
Change in net unrealized appreciation of investment securities 496,228
-------------------
Net gain 1,183,283
-------------------
Net increase in net assets resulting from operations $ 1,198,023
===================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GLOBALT Growth Fund
Statement of Changes in Net Assets
<S> <C> <C>
For the year For the year
ended ended
Increase/(Decrease) in Net Assets October 31, 1998 October 31, 1997
Operations
Net investment income (loss) $ 14,740 $ 3,398
Net realized gain 687,055 659,135
Change in net unrealized appreciation 496,228 524,623
---------------- ----------------
Net Increase in net assets resulting from operations 1,198,023 1,187,156
---------------- ----------------
Distributions to shareholders:
From net investment income (5,420) (2,033)
From net realized gain (753,352) (52,184)
---------------- ----------------
Total distributions (758,772) (54,217)
Share Transactions
Net proceeds from sale of shares 3,441,709 3,528,668
Shares issued in reinvestment of distributions 758,704 54,217
Shares redeemed (933,230) (156,226)
---------------- ----------------
Net increase in net assets resulting
from share transactions 3,267,183 3,426,659
---------------- ----------------
Total increase in net assets 3,706,434 4,559,598
Net Assets
Beginning of period $ 8,002,674 $ 3,443,076
---------------- ----------------
End of period [including undistributed net investment
income(loss) of $14,740 and $3,398] $ 11,709,108 $ 8,002,674
================ ================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GOLBALT Growth Fund
Financial Highlights
<S> <C> <C> <C>
For the year For the year For the period
ended ended ended
October 31, 1998 October 31, 1997 October 31, 1996 (b)
Selected Per Share Data
Net asset value, beginning of period $13.79 $12.48 $10.00
-------------- --------------- ---------------
Income from investment operations:
Net investment income (loss) 0.02 0.01 0.01
Net realized and unrealized gain (loss) 3.50 3.34 2.47
-------------- --------------- ---------------
Total from investment operations 3.52 3.35 2.48
Less Distributions
From net investment income (0.06) - -
From net realized gain (1.11) (0.17) -
-------------- --------------- ---------------
-------------- --------------- ---------------
Total Distributions (1.17) (0.17) -
-------------- --------------- ---------------
Net asset value, end of period $16.14 $15.66 $12.48
============== =============== ===============
Total Return 13.28% 27.15% 27.(a)
Ratios and Supplemental Data
Net assets, end of period (000) $11,709 $8,003 $3,443
Ratio of expenses to average net assets 1.17% 1.17% 1.(a)
Ratio of expenses to
average net assets before reimbursement 1.19% 1.19% 1.(a)
Ratio of net investment income to
average net assets 0.14% 0.06% 0.(a)
Ratio of net investment income to
average net assets before reimbursement 0.12% 0.04% 0.(a)
Portfolio turnover rate 83.78% 110.01% 66.(a)
<FN>
(a) Annualized
(b) December 5, 1995 (commencement of operations) to October 31, 1996. </FN>
</TABLE>
<PAGE>
GLOBALT GROWTH FUND
Notes to Financial Statements
October 31, 1998
NOTE 1. ORGANIZATION
GLOBALT Growth Fund (the "Fund") is organized as a series of the AmeriPrime
Funds, an Ohio business trust (the "Trust). The Trust is registered under the
Investment Company Act of 1940, as amended, as a diversified series, open end
management investment company whose investment objective is to provide long term
capital growth. The Trust Agreement permits the Trustees to issue an unlimited
number of shares of beneficial interest of separate series without par value.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements.
Securities Valuations- Securities which are traded on any exchange or on
the NASDAQ over-the-counter market are valued at the last quoted sale price.
Lacking a last sale price, a security is valued at its last bid price except
when, in the Advisor's opinion the last bid price does not accurately reflect
the current value of the security. All other securities for which
over-the-counter market quotations are readily available are valued at their
last bid price. When market quotations are not readily available, and the
Advisor determines the last bid price does not accurately reflect the current
value or when restricted securities are being valued, such securities are valued
as determined in good faith by the Advisor, in conformity with guidelines
adopted by and subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Advisor believes such prices accurately reflect the fair market value of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith by the Advisor,
subject to review of the Board of Trustees. Short term investments in fixed
income securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
<PAGE>
GLOBALT GROWTH FUND
Notes to Financial Statements
October 31, 1998
Federal Income Taxes- The Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.
Dividends and Distributions- The Fund intends to distribute substantially all of
its net investment income as dividends to its shareholders on an annual basis.
The Fund intends to distribute its net long-term capital gains and its net
short-term capital gains at least once a year.
Other- The Fund follows industry practice and records security transactions on
the trade date. The specific identification method is used for determining gains
or losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrual
basis. Discounts and premiums on securities purchased are amortized over the
life of the respective securities.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains GLOBALT, Inc. (the "Advisor") to manage the Fund's
investments. The advisor was organized as a Georgia corporation in 1990. Angela
Allen, President of the Advisor, and Samuel Allen, Chairman of the Advisor, are
the controlling shareholders of GLOBALT, Inc. The investment decisions for the
Fund are made by a committee of the Advisor, which is primarily responsible for
the day to day management of the Fund's portfolio.
Under the terms of the management agreement (the "Agreement"), the Advisor
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of the Fund except brokerage commissions, taxes,
interest, fees and expenses of non-interested person trustees, and extraordinary
expenses. As compensation for its management services and agreement to pay the
Fund's expenses, the Fund is obligated to pay the Advisor a fee computed and
accrued daily and paid monthly at an annual rate of 1.17% of the average daily
net assets of the Fund. It should be noted that most investment companies pay
their own operating expenses directly, while the Fund's expenses, except those
specified above, are paid by the Advisor. For the year ended October 31, 1998,
the Advisor received a fee of $122,484 from the Fund. The Advisor agreed to pay
other expenses to the extent necessary to maintain total expenses at the
contractual rate of 1.17%, for the period the Advisor reimbursed expenses of
$1,844.
The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator")
to manage the funds business affairs and provide the Fund with administrative
services, including all regulatory reporting and necessary office equipment and
personnel. For the year ended
GLOBALT GROWTH FUND
Notes to Financial Statements
October 31, 1998
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued
October 31, 1998, the Administrator received fees of $30,000 from the Advisor
for administrative services provided to the Fund. The Fund retains , Inc. ("the
Distributor") to act as the principal distributor of the Fund's shares. There
were no payments made to the Distributor for the year ended October 31, 1998.
Certain members of management of the Administrator and the Distributor are also
members of management of the AmeriPrime Trust.
NOTE 4. CAPITAL SHARE TRANSACTIONS
As of October 31, 1998 there was an unlimited number of no par value shares
of capital stock authorized for the Fund. Paid in capital at October 31, 1998
was $9,775,155.
Transactions in capital stock were as follows: For the periods ended
October 31:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
1998 1998 1997 1997
Shares Dollars Shares Dollars
-------------------- --------------------- --------------------- --------------------
Shares sold 216,459 $3,441,709 241,426 $3,528,668
Shares issued in
reinvestment of
dividends 53,733 758,704 4,216 54,217
Shares redeemed
(55,461) (933,230) (10,682) (156,226)
-------------------- --------------------- --------------------- --------------------
214,731 3,267,183 234,960 $3,426,659
</TABLE>
<PAGE>
NOTE 5. INVESTMENTS
For the period from November 1, 1997 through October 31, 1998, purchases
and sales of investment securities, other than short-term investments,
aggregated $11,979,755 and $8,782,535, respectively. The gross unrealized
appreciation for all securities totaled $1,371,166 and the gross unrealized
depreciation for all securities totaled $42,134 for a net unrealized
appreciation of $1,329,032. The aggregate cost of securities for federal income
tax purposes at October 31, 1998 was $10,122,602.
GLOBALT GROWTH FUND
Notes to Financial Statements
October 31, 1998
NOTE 6. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 7. Year 2000 Issue
Like other mutual funds, financial and business organizations and individuals
around the world, the fund could be adversely affected if the computer systems
used by the Advisor, Administrator or Servicers do not properly process and
calculate date-related information and data from and after January 1, 2000. This
is commonly known as the "Year 2000 Issue." The Advisor and Administrator have
taken steps that they believe are reasonably designed to address the Year 2000
Issue with respect to computer systems that are used and to obtain reasonable
assurances that comparable steps are being taken by each of the Fund's major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and Board of Trustees
Globalt Growth Fund
We have audited the accompanying statement of assets and liabilities of Globalt
Growth Fund (a member of the Ameriprime Fund series), including the schedule of
portfolio investments, as of October 31, 1998, and the related statement of
operations, the statement of changes in net assets, and the financial highlights
for each of the periods indicated. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held by
the custodian as of October 31, 1998, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Globalt Growth Fund as of October 31, 1998 and the results of its operations,
the changes in its net assets, and the financial highlights for each of the
periods indicated, in conformity with generally accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
November 9, 1998
<PAGE>
Dear Fellow Shareholders,
In an attempt to keep pace with the current market frenzy, many value
managers have softened their discipline to allow the ownership of such high
flyers as America Online (p/e 160), Microsoft (p/e 50) and Dell (p/e 62). In
contrast, we have been taking advantage of the market's recent 40% off sale to
add lower p/e, high-quality growers to our portfolio. As true long-term
investors, we welcome the occasional correction as an opportunity to buy blue
chip companies at historically low prices. Without compromising our strict value
approach, we have added some of the world's best run franchises and most
valuable global brands to our portfolio. Purchases since our last shareholder
report include AT&T, Pepsi, Hewlett-Packard, Mobil, Nike, Kodak and American
Home Products. Our portfolio continues to trade at very attractive discounts to
the market across all four traditional measures of fundamental value (see
table). For example, our Fund trades at a p/e of just 17 times 1999 estimates,
30% below the market's p/e of 24.
The objective of the IMS Capital Value Fund is to provide long-term
growth for its shareholders. We seek to meet this objective by investing in blue
chip stocks with strong value characteristics and improving business momentum.
The Fund holds approximately forty companies, well-diversified across all
sectors of the S & P 500 Index. Our Fund's low turnover helps keep taxable gains
and trading costs to a minimum in an effort to produce superior risk-adjusted,
after-tax returns. For example, while the fund had a positive return during our
fiscal year which ended October 31, 1998, our shareholders will have no taxable
dividend or capital gains distributions to report.
Year-to-date, as of October 31, 1998, the IMS Capital Value Fund had a
total return of +2.3%, outperforming the broad market, as measured by the
1500-stock Value Line index, which was down -2.9%. While we are pleased with the
fund's year-to-date returns, we are still unhappy with our "since inception"
performance relative to our peers. We fully expect and intend to produce better
relative performance in the future.
Although the market's recent correction was painful, it was also
short-lived. Our Fund held up about as well as the average equity fund during
the correction, according to Lipper Analytical Services. Recent articles
chastising value managers for not holding up better than the market during the
last correction, miss the fact that it's normal for value to perform in-line
with the market during sharp corrections. Value tends to outperform in general
over the long haul and even more so during periods of economic recovery and slow
growth. Value will eventually regain its position of leadership and while it's
still very early, several indicators suggest the landscape may already be
shifting towards a more favorable value environment.
In any event, we will continue searching out undervalued, quality
businesses with improving fundamentals. We will continue striving to both grow
and protect our shareholders assets. And we will continue working diligently
towards our goal of making the IMS Capital Value Fund one of the most successful
and respected funds in the industry.
Thank you for joining us as shareholders in the IMS Capital Value Fund.
We appreciate your confidence and trust.
Sincerely,
Carl W. Marker Douglas E. Johanson, CFA
Portfolio Manager Research Analyst
<PAGE>
IMS Capital Value Fund
Portfolio Profile
Data as of October 31, 1998
Comparative Valuations
Discount to
S&P 500 Index
Price/Book Ratio 44%
Price/Cashflow Ratio 32%
Price/Sales Ratio 19%
Price/Earnings Ratio 19%
*Sources: Donaldson, Lufkin & Jenrette, Bloomberg, Value Line, and
Morningstar. Earnings and Cashflow are based on 1998 estimates.
Fund Facts (10/31/98)
Growth of $10,000
since inception (8/5/96) ............. $12,157
Median Market Cap. ...................... $12.0 bil.
Number of Holdings ...................... 38
Net Assets .............................. $11,523,988
Share Price ............................. 11.26
<PAGE>
Performance Summary (10/31/98)
IMS Capital
Value Fund S&P 500 Value Line
8/5/96 $10,000 $10,000 $10,000
10/31/96 $10,760 $10,739 $10,610
4/30/97 $11,360 $12,320 $11,494
10/31/97 $12,060 $14,189 $14,047
4/30/98 $13,612 $17,380 $16,239
10/31/98 $12,157 $17,308 $14,029
Since Inception
Average Annual Returns 12 months 8/5/96
IMS Capital Value Fund 0.8% 9.1%
Value Line Index -0.1% 16.3%
S&P 500 Index 22.0% 27.5%
This graph shows the value of a hypothetical initial investment of $10,000 in
the Fund, the Value Line Composite Index, and the S&P 500 Index on August 5,
1996, and held through October 31, 1998. The Value Line Index is an
equally-weighted average of 1,600 companies, including those that make up the
S&P 500. The S&P 500 Index is a widely recognized, capitalization-weighted
average of 500 of the largest U.S. companies. Both indexes are unmanaged and the
S&P 500 Index includes the reinvestment of dividends. The Value Line and S&P 500
Index returns do not reflect expenses, which have been deducted from the Fund's
return. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than their original cost. THE FUND'S RETURN REPRESENTS PAST PERFORMANCE AND IS
NOT A GUARANTEE OF FUTURE RESULTS.
Top Ten Holdings (10/31/98)
Rubbermaid 4.8%
RJR Nabisco 4.2
Electronic Data Systems 4.1
H&R Block 3.5
Alcoa 3.4
Waste Management 3.4
Amgen 3.4
Intel 3.3
Mobil 3.3
AT&T 3.2
Top Ten Industries (10/31/98)
Computers & Related Technologies 15.0%
Drugs 7.3
Retail 7.1
Food & Tobacco 7.0
Other Consumer Goods & Services 6.0
Basic Materials 6.0
Household Products 5.9
Other Services 5.9
Environmental 3.4
Apparel 3.4
<PAGE>
Company Description
AT&T - leading provider of communication services and products Alcoa - world's
largest aluminum producer with operations in 30 countries Amgen - world's
largest biotech firm with double the sales of its nearest
competitor
American Home Products - manufacturer of prescription and otc drugs, and other
healthcare products
Bank One - fifth largest bank in U.S. and second biggest credit card issuer
Bausch & Lomb - leading maker of contact lenses, solutions, sunglasses,
hearing aids, etc.
Citigroup - created by the merger of Citicorp and Travelers - worldwide
financial services company
Columbia Healthcare - largest hospital management company in the United
States
Conseco - major financial services company specializing in insurance products
Eastman Kodak - manufactures and markets consumer and commercial photography
/imaging products
Electronic Data Systems - provides information technology services to companies
worldwide
Fruit of the Loom - largest U.S. producer of cotton T-shirts and underwear H & R
Block - world's largest tax preparation firm, second only to McDonald's
in number of outlets
Hewlett-Packard - leading producer of printers, fax machines, computers, and
other technology
Intel - manufactures computer chips and other computer-related products IVAX -
world's leading generic drug manufacturer Marvel - toy company operating in the
licensing, comic book, toy, trading card
and sticker businesses
Mobil - one of the largest integrated oil companies in the world Motorola -
leading manufacturer of electronic equipment, cell phones, and pagers Nike -
makes and designs high quality footwear and apparel Newmont Mining - North
America's largest gold producer Office Depot - largest office supply superstore
chain in North America Olsten - largest U.S. provider of home health-care and
third largest temporary
help service
Oracle - world's largest maker of database management software PETsMART -
world's largest operator of superstores specializing in pet
supplies and services
Pepsi - markets and distributes soft drinks and snack food on a worldwide basis
RJR Nabisco - second largest food and tobacco company in the world - owns 80%
of Nabisco Foods.
Rubbermaid - leading maker of household plastic and rubber products - owns
Little Tykes and Graco
Shaw Industries - largest U.S. carpet manufacturer and retailer
Singer - world's largest manufacturer of sewing machines and a leading emerging
market retailer
Sunbeam - makes and markets brand name consumer products (housewares, personal
care, etc.)
Symantec - leading software provider of PC productivity tools Texas Utilities -
one of the U.S.'s largest electric and gas utilities Toys `R' Us - children's
products retailer U.S. West Media Group - third largest cable company in the
U.S. Union Pacific - largest railroad in U.S. - 35,000 miles of track in western
two-thirds of country
United Healthcare - one of the nation's largest Health Maintenance
Organizations (HMO's)
Waste Management - world's largest solid waste collection and disposal company
<PAGE>
<TABLE>
<CAPTION>
IMS Capital Value Fund
Schedule of Investments - October 31, 1998
<S> <C> <C>
Common Stocks - 99.6% Shares Value
Basic Materials - 6.0%
Aluminum Company of America 5,000 396,250
Newmont Mining 14,000 297,500
-------------------
-------------------
693,750
-------------------
Apparel - 3.4%
Fruit of the Loom, Inc. (a) 14,700 224,175
Nike, Inc. (Class B) 4,000 174,750
-------------------
-------------------
398,925
-------------------
Banks - 2.8%
Bank One Corp. 6,500 317,688
-------------------
Broadcasting - 2.2%
Media One Group, Inc. (a) 6,000 253,875
-------------------
Communications - 2.7%
Motorola, Inc. 6,000 312,000
-------------------
Computer & Related Technologies - 15.0%
Electronic Data Systems Corp. 11,500 467,906
Hewlett Packard Co. 6,000 361,125
Intel Corp. 4,300 383,506
Oracle Corporation (a) 12,000 354,750
Symantec Corp. 10,000 160,000
-------------------
-------------------
1,727,287
-------------------
Drugs - 7.3%
American Home Products Corp. 4,500 219,375
Amgen, Inc. (a) 5,000 392,812
IVAX Corp. (a) 24,000 228,000
-------------------
-------------------
840,187
-------------------
Entertainment - 1.7%
Marvel Enterprises, Inc. (a) 34,000 195,500
-------------------
Environmental - 3.4%
Waste Management, Inc. 8,600 388,075
-------------------
Financial Services - 2.4%
Citigroup, Inc. 6,000 282,375
-------------------
Food & Tobacco - 7.0%
PepsiCo, Inc. 9,500 320,625
RJR Nabisco Holdings Corp. 17,000 485,563
-------------------
-------------------
806,188
-------------------
Other Services - 5.9%
H & R Block 9,000 403,312
Olsten Corp. 30,000 275,625
-------------------
-------------------
678,937
-------------------
Healthcare Products - 2.7%
Bausch & Lomb 7,500 312,656
-------------------
IMS Capital Value Fund
Schedule of Investments - October 31, 1998 - continued
Common Stocks - continued Shares Value
Hospitals & Managed Care - 3.3%
Columbia HCA Healthcare Corp. 7,500 $ 157,500
United Healthcare Corp. 5,000 217,812
-------------------
-------------------
375,312
-------------------
Other Consumer Goods & Services - 6.0%
Eastman Kodak Inc. 3,200 248,000
Shaw Industries, Inc. 16,000 278,000
Singer Co. 30,000 168,750
-------------------
694,750
-------------------
Household Products - 5.9%
Rubbermaid, Inc. 16,500 547,594
Sunbeam Corp. 19,000 128,250
-------------------
-------------------
675,844
-------------------
Insurance - 2.4%
Conseco, Inc. 8,000 277,500
-------------------
Oil & Gas - 3.3%
Mobil Corp. 5,000 378,437
-------------------
Railroads - 2.7%
Union Pacific Corp. 6,500 309,563
-------------------
Retail - 7.1%
Office Depot, Inc. (a) 11,000 275,000
PETsMART, Inc. (a) 37,000 265,938
Toys R Us 14,000 273,875
-------------------
-------------------
814,813
-------------------
Telecommunications - 3.2%
AT&T Corp. 6,000 373,500
-------------------
Utilities - 3.2%
Texas Utilities Co. 8,500 371,876
-------------------
TOTAL COMMON STOCKS (Cost $11,194,766) $ 11,479,038
===================
TOTAL INVESTMENTS - 99.6% (Cost $11,194,766) 11,479,038
Other assets less liabilities -0.4% 44,951
-------------------
TOTAL NET ASSETS - 100% $ 11,523,989
===================
(a) non-income producing
IMS Capital Value Fund
Securities Sold Short - October 31, 1998
Short Options Shares Value
Rubbermaid, Inc. 80 $ 51,000
-------------------
TOTAL OPTIONS (proceeds $35,639) $ 51,000
===================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IMS Capital Value Fund October 31, 1998
Statement of Assets & Liabilities
<S> <C> <C>
Assets
Investment in securities, at value (cost $11,194,766) $ 11,479,038
Receivable for securities sold 35,639
Subscriptions receivable 59,000
Dividends receivable 3,210
Interest receivable 1,405
Deferred organizational costs 17,837
---------------------
Total assets 11,596,129
Liabilities
Payable to custodian bank 7,469
Accrued advisory fee payable 13,671
Securities sold short, at value - proceeds $35,639 51,000
---------------
Total liabilities 72,140
---------------------
Net Assets $ 11,523,989
=====================
Net Assets consist of:
Paid in capital $ 11,306,483
Accumulated undistributed net realized gain (loss) on investments (45,397)
Accumulated undistributed net realized gain (loss) on options transactions (6,008)
Net unrealized appreciation on investments 268,911
---------------------
Net Assets, for 1,021,777 shares $ 11,523,989
=====================
Net Asset Value
Net Assets
Offering price and redemption price per share ($11,523,989/1,021,777) $ 11.28
=====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IMS Capital Value Fund
Statement of Operations for the year ended October 31, 1998
<S> <C> <C>
Investment Income
Dividend Income $ 122,970
Interest Income 12,431
-----------------
Total Income 135,401
Expenses
Investment advisory fee $ 164,074
Administration fee 30,000
Transfer agent fee 19,732
Fund accounting fee 16,794
Legal fees 6,353
Custodian fee 7,549
Amortization of ogranizational expenses 4,793
Audit fees 898
Registration fees 5,402
Shareholder reports 3,877
Trustees fees 781
Miscellaneous 4,607
-----------------
Total operating expenses before reimbursement 264,860
Reimbursed expenses (69,029)
-----------------
Total operating expenses 195,831
-----------------
Net Investment Income (Loss) (60,430)
-----------------
Realized & Unrealized Gain (Loss)
Net realized gain (loss) on investment securities 26,314
Net realized gain (loss) on options transactions (6,008)
Change in net unrealized appreciation (depreciation) on
on investment securities 69,368
----------------
Net gain (loss) on investment securities 89,674
-----------------
Net increase (decrease) in net assets resulting
from operations $ 29,244
=================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IMS Capital Value Fund
Statement of Changes in Net Assets
<S> <C> <C>
For the For the
year ended year ended
October 31, 1998 October 31, 1997
Increase/(Decrease) in Net Assets
Operations
Net investment income (loss) $ (60,430) (48,844)
Net realized gain (loss) on investments 26,314 672,917
Net realized gain (loss) on options transactions (6,008)
Change in net unrealized appreciation (depreciation) 69,368 (44,863)
--------------- ---------------
Net Increase in net assets resulting from operations 29,244 579,210
--------------- ---------------
Distributions to shareholders:
Return of capital (25,273) -
From net capital gain (682,377) -
--------------- ---------------
--------------- ---------------
Total distributions (707,650) -
--------------- ---------------
Share Transactions
Net proceeds from sale of shares 3,955,446 5,141,834
Shares issued in reinvestment 702,348 -
Shares redeemed (2,387,348) (529,761)
--------------- ---------------
Net increase in net assets resulting
from share transactions 2,270,446 4,612,073
--------------- ---------------
Total increase in net assets 1,592,040 5,191,283
Net Assets
Beginning of period 9,931,949 4,740,666
--------------- ---------------
End of period [including undistributed net investment
income (loss) $(60,430) and $(48,844), respectively$] 11,523,989 $ 9,931,949
=============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IMS Capital Value Fund
Financial Highlights
<S> <C> <C> <C>
For the periods ended October 31
Selected Per Share Data 1998 1997 1996 (b)
Net asset value, beginning of period $12.06 $10.76 $10.00
----------------- ---------------- ----------------
Income from investment operations
Net investment income (loss) (0.06) (0.08) (0.01)
Net realized and unrealized gain (loss) 0.12 1.38 0.77
----------------- ---------------- ----------------
----------------- ---------------- ----------------
Total from investment operations 0.06 1.30 0.76
----------------- ---------------- ----------------
Less Distributions
Return of capital (0.03) - -
From net capital gain (0.81) - -
----------------- ---------------- ----------------
----------------- ---------------- ----------------
Total distributions (0.84) - -
----------------- ---------------- ----------------
Net asset value, end of period $11.28 $12.06 $10.76
================= ================ ================
Total Return 2.27% 12.08% 30.(a)
Ratios and Supplemental Data
Net assets, end of period (000) $ 11,524 $9,932 $4,741
Ratio of expenses to
average net assets 1.73% 1.97% 1.(a)
Ratio of expenses to average net
assets before reimbursement 2.34% 2.54% 3.(a)
Ratio of net investment income to
average net assets (0.53%) (0.64%) (0.(a)%
Ratio of net investment income to average
net assets before reimbursement (1.14%) (1.20%) (2.(a)%
Portfolio turnover rate 81.74% 34.76% 3.56%
<FN>
(a) Annualized
(b) August 5, 1996 (commencement of operations) to October 31, 1996 </FN>
</TABLE>
<PAGE>
IMS CAPITAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
NOTE 1. ORGANIZATION
IMS Capital Value Fund. (the "Fund") is a series of the AmeriPrime Funds, an
Ohio business trust (the "Trust"), on July 30, 1996. The Trust is registered
under the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The investment objective of the fund is to
provide long-term growth. The Trust Agreement permits the trustees to issue an
unlimited number of shares of beneficial interest of separate series without par
value.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuation- Securities which are traded on any exchange or on the
NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking
a last sale price, a security is valued at its last bid price except when, in
the Advisor's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, and the Advisor determines the last
bid price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, in conformity with guidelines adopted by and subject to
review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Advisor believes such prices accurately reflect the fair market values of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. 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 of Trustees. Short-term investments in fixed
income securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
IMS CAPITAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
Federal Income Taxes- The Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.
Dividends and Distributions- The Fund intends to distribute substantially all of
its net investment income as dividends to its shareholders on an annual basis.
The Fund intends to distribute its net long-term capital gains and its net
short-term capital gains at least once a year.
Other- The Fund follows industry practice and records security transactions on
the trade date. The specific identification method is used for determining gains
or losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrual
basis. Discounts and premiums on securities purchased are amortized over the
life of the respective securities.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains IMS Capital Management, Inc. (the "Advisor") to manage the
Fund's investments. Carl W. Marker, Chairman and President of the Advisor, is
primarily responsible for the day to day management of the Fund's portfolio.
Under the terms of the management agreement, (the "Agreement"), the Advisor
manages the Fund's investments subject to approval of the Board of Trustees. As
compensation for its management services, the Fund is obligated to pay the
Advisor a fee computed and accrued daily and paid monthly at an annual rate of
1.36% of the average daily net assets of the Fund. For the year ended October
31, 1998, the Advisor received a fee of $164,074 from the Fund. The Advisor is
voluntarily reimbursing certain Fund expenses. There is no assurance that such
reimbursement will continue in the future.
The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator") to
manage the Funds business affairs and provide the Fund with administrative
services, including all regulatory reporting and necessary office equipment and
personnel. For the year ended October 31, 1998, the Administrator received fees
of $30,000 from the Advisor for administrative services provided to the fund.
IMS CAPITAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued
The Fund retains AmeriPrime Financial Securities, Inc. (the "Distributor") to
act as the principal distributor of the Fund's shares. There were no payments
made to the Distributor for the year ended October 31, 1998. Certain members of
management of the Administrator and the Distributor are also members of
management of the AmeriPrime Trust.
NOTE 4. CAPITAL SHARE TRANSACTIONS
As of October 31, 1998, there was an unlimited number of no par value
shares of capital stock authorized for the Fund. Paid in capital at October 31,
1998 was $11,392,186.
For the years ended October 31:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------- ----------------- ------------------- ---------------- ------------------
1998 1998 1997 1997
- ---------------------------------- ----------------- ------------------- ---------------- ------------------
Shares Dollars Shares Dollars
Shares sold 338,518 $3,955,446 426,253 $5,141,834
Shares issued in reinvestment of
dividends
65,032 702,348 - -
Shares redeemed
(205,539) (2,387,348) (43,144) (529,761)
--------- -- ----------- -- -------- ----- ---------
198,011 $2,270,446 383,109 $4,612,073
- ---------------------------------- ----------------- ------------------- ---------------- ------------------
</TABLE>
NOTE 5. INVESTMENTS
For the year ended October 31, 1998, purchases and sales of investment
securities, other than short-term investments, aggregated $10,696,139 and
$9,199,428, respectively. The gross unrealized appreciation for all securities
totaled $1,345,452 and the gross unrealized depreciation for all securities
totaled $1,076,541 for a net unrealized appreciation of $268,911. The aggregate
cost of securities for federal income tax purposes at October 31, 1998 was
$11,159,127.
NOTE 6. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
IMS CAPITAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
NOTE 7. RECLASSIFICATIONS
In accordance with SOP 93-2, the fund has recorded a reclassification in the
capital accounts. As of October 31, 1998 the fund recorded permanent book/tax
differences of $60,430 from undistributed net investment income to paid in
capital and a permanent book tax difference of $25,273 from undistributed net
investment income to paid in capital. This reclassification has no impact on the
net asset value of the fund and is designed generally to present undistributed
income and realized gains on a tax basis which is considered to be more
informative to shareholders.
NOTE 8. Year 2000 Issue
Like other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by the Advisor, Administrator or Servicers do not properly process and
calculate date related information and data from and after January 1, 2000. This
is commonly known as the "Year 2000 Issue." The Advisor and Administrator have
taken steps that they believe are reasonably designed to address the Year 2000
Issue with respect to computer systems that are used and to obtain reasonable
assurances that comparable steps are being taken by each of the Fund's major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund.
<PAGE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and Board of Trustees
IMS Capital Value Fund
We have audited the accompanying statement of assets and liabilities of IMS
Capital Value Fund (a member of the Ameriprime Fund series), including the
schedule of portfolio investments, as of October 31, 1998, and the related
statement of operations, the statement of changes in net assets, and the
financial highlights for each of the periods indicated. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held by
the custodian as of October 31, 1998, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of IMS
Capital Value Fund as of October 31, 1998 and the results of its operations, the
changes in its net assets, and the financial highlights for each of the periods
indicated, in conformity with generally accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
November 9, 1998
<PAGE>
December 8, 1998
Dear Shareholders:
What a wild and brutal summer it was in the stock market. During the first four
months of the year, stock market returns were in hyper-speed and everybody was
jumping on the stock market bandwagon. This environment changed abruptly and
dramatically.
In the third quarter, the average diversified U.S. stock fund delivered a
negative 15.02% return, according to Lipper Analytical Services - a steeper loss
than the 11.9% drop in the Dow Jones Industrials and the 9.95% drop in the S&P
500 index. Funds that buy small cap stocks were particularly hard hit, with a
loss of 21.55% in the quarter and a loss of 16.53% year to date.
Results
The Marathon Value Fund's fiscal year ended on October 31, 1998. During the last
six months the Fund was down 17.8%, while the Russell 2000 was down 21.2%. Since
the fund's inception on March 9, 1998, the fund has shown a loss of 15.2% versus
a decline in the Russell 2000 of 18.0%. <TABLE> <CAPTION>
-----------------------------------------------------------------
Returns for the Periods Ended 10/31/98
-----------------------------------------------------------------
<S> <C> <C> <C>
Total Return
Since Inception
Fund/Index 6 months March 9, 1998
---------- -------- -------------
Marathon Value Fund -17.8% -15.2%
Russell 2000 -21.2% -18.0%
</TABLE>
<TABLE>
<S> <C> <C>
Date Russell 2000 MVF
- ------ -------------- -----
3/9/98 $ 10,000.00 $ 10,000.00
3/31/98 $ 10,424.18 $ 10,050.00
4/30/98 $ 10,472.11 $ 10,320.00
5/31/98 $ 9,902.41 $ 9,920.00
6/30/98 $ 9,919.11 $ 9,510.00
7/31/98 $ 9,102.84 $ 8,800.00
8/31/98 $ 7,328.89 $ 7,310.00
9/30/98 $ 7,884.93 $ 7,600.00
10/30/98 $ 8,200.00 $ 8,480.00
</TABLE>
<PAGE>
The chart shows the value of a hypothetical initial investment of $10,000 in the
Fund and the Russell 2000 Index on March 9, 1998 and held through October 31,
1998. The Russell 2000 Index is a widely recognized unmanaged index of common
stock prices. Performance figures include the change in value of the stocks in
the indices, reinvestment of dividends, and are not annualized. The index return
does not reflect expenses, which have been deducted from the Fund's return. THE
FUND'S RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF FUTURE
RESULTS.
Portfolio's Largest Positions
As of October 31, we were 90.6% invested in stocks and 9.4% in cash. At period
end our five largest holdings consisted of the following:
Telxon Corp designs and manufactures wireless and mobile information
systems. The company integrates wireless technology with a wide array
of peripherals and software.
St. John Knits designs, manufactures, and markets women's clothing and
accessories.
Ventas Inc. is a self administered, self managed real estate company
that operates and acquires long-term acute care hospitals, nursing
centers, and assisted living centers.
Bear Stearns Companies Inc. offers investment banking and securities
trading and brokerage services. The Company's business includes
corporate finance and mergers and acquisitions, institutional equities
and fixed income sales and trading, private client services and more.
Arctic Cat designs, engineers, manufactures, and markets snowmobiles
and all-terrain vehicles under the "Arctic Cat" brand name. The Company
also sells personal watercrafts under the "Tigershark" brand name.
Investment OutlookIn my last few letters to our individually managed accounts, I
have encouraged our clients to moderate their expectations and warned that stock
market investing would become more difficult and volatile going forward. I had
absolutely no idea how much more difficult and volatile. Last summer and early
fall were excruciatingly painful for investors in stocks. Nobody enjoys seeing
their investments pull back by 20% in a month.
This has been an unusually difficult time period not only for small cap stocks,
but also the value investment philosophy. In general terms, the best performing
stocks over the past twelve months have been those that make up the largest
market capitalization of the stock indices. The advance has been highly
concentrated on the largest companies that have continued to report positive
earnings momentum, without regard to their valuation. An astounding fourteen
stocks accounted for 99% of the S&P 500's performance in the first nine months.
If you didn't own Microsoft, Dell and Lucent you had very little chance of good
performance.
We are value investors and buying companies whose stock prices are depressed
relative to their future prospects is our focus. Unfortunately, as more and more
money has been concentrated on the largest 50 companies during the first nine
months of the year, the "out of favor" companies and many smaller capitalization
issues have fallen further behind in relative performance. On September 30, the
Russell 2000 index of small cap stocks was lower than it was 2 1/2 years ago in
the spring of 1996. Were that true of the Dow, it would be below 5000. Like our
clients, we have been very frustrated by this large divergence in performance.
We believe, however, that this trend is now beginning to reverse itself and the
same portfolio we have struggled with the last six months will be a winning hand
over the next year. The recent returns have been very encouraging.
MARKET INDICIES (9/30 - 12/4)
Marathon Value Fund 18.96 %
S&P 500 Index 16.01 %
Russell 2000 Index 9.79 %
Summary
This year has proven to be a very difficult time to begin a small cap fund. In
the last sixty years small stocks have fallen while large caps have risen on
only five occasions. This year will be the sixth. It will also be the greatest
disparity of performance in history.
As of December 8, the S&P 500 Index (the standard measure of big stocks among
money managers) was up 22%, while the Russell 2000 (a common measure of
small-stock performance) is down 8%.
We are confident going forward that the huge divergence between value stocks and
growth stocks, and small stocks and large stocks will not continue. As long-term
value investors we are not attempting any quick fixes to quickly bandage our
portfolios. We have been through up periods and down periods and will continue
doing what we always do, looking for the best stock values available. We are not
devastated by the recent declines, but are actually incredibly excited about
some of the opportunities that have been created during the decline.
Market bottoms are not made of smiles and pleasant feelings. They come with a
great deal of pain and you are not sure if you can take any more of the decline.
In fact, you feel like calling your manager and screaming "get me out now." In
our opinion most of that has already happened. The stock market will continue
with the volatility it has recently experienced; however, stocks continue to be
the asset class of choice for long term investors and we are optimistic that
small cap stocks will perform even better.
Please feel free to call me if you have any questions concerning the fund and
thank you for your support during this difficult beginning.
Sincerely,
Mark Matsko, CFA
Portfolio Manager
<PAGE>
<TABLE>
<CAPTION>
Marathon Value Fund
Schedule of Investments - October 31, 1998
<S> <C> <C>
Common Stocks - 92.3% Shares Value
Apparel - 3.0%
St. John's Knits, Inc. 4,800 $ 96,900
------------------
Banks & Bank Holding Companies - 1.3%
First Security Corp. 2,130 43,532
------------------
Business Equipment & Services - 7.4%
Analysts International Corp. 4,800 84,300
(John H.) Harland Co. 6,000 87,000
Olsten Corp. 7,700 70,744
------------------
------------------
242,044
------------------
Chemicals - 2.4%
IMC Global Inc. 3,000 78,000
------------------
Consumer Products (Durables) - 2.4%
Fibermark, Inc. (a) 3,000 42,750
QEP Co. (a) 5,000 36,875
------------------
79,625
------------------
Consumer Products (Non-Durables) - 5.4%
Del Labratories, Inc. 1,700 34,850
Food Lion Inc. - Class B 9,000 92,250
Morton International, Inc. 2,000 49,750
------------------
------------------
176,850
------------------
Computers & Peripherals - 2.1%
Adflex Solutions, Inc. (a) 9,300 67,425
------------------
Financial Services - 7.4%
Bear Stearns Companies, Inc. 4,700 167,731
United Asset Management Corp. 3,000 72,750
------------------
------------------
240,481
------------------
Healthcare Products - 6.0%
Ballard Medical Products 4,000 85,000
Corvel Corp. (a) 3,000 109,875
------------------
194,875
------------------
Hospitals - 8.3%
Healthsouth Corp. (a) 10,000 121,250
Ventas Inc. 13,000 148,688
------------------
------------------
269,938
------------------
Measuring Equipment - 3.2%
Thermospectra Corp. (a) 9,000 105,750
------------------
Marathon Value Fund
Schedule of Investments - October 31, 1998 - continued
Common Stocks - continued Shares Value
Oil & Gas Services - 2.3%
Nabors Industries, Inc. (a) 4,000 74,000
------------------
Recreational Vehicles - 4.7%
Artic Cat, Inc. 16,600 153,550
------------------
Retail - 3.9%
Dress Barn, Inc. (a) 9,100 128,538
------------------
Restaurants - 7.2%
Applebee's International, Inc. 2,800 57,050
Cracker Barrel Old Country Stores 5,000 129,375
Schlotzsky's, Inc. (a) 5,000 48,437
------------------
------------------
234,862
------------------
Telecommunications - 11.7%
ADC Telecommunications (a) 3,000 69,000
Tele-Communications, Inc. (a) 3,000 126,375
Telxon Corp. 9,000 184,500
------------------
------------------
379,875
------------------
Transportation - 13.6%
Arnold Industries, Inc. 11,000 140,250
Covenant Transport Inc. Class A (a) 8,000 121,000
Expeditors International of Washington, Inc. 2,500 84,687
Trico Marine Services, Inc. (a) 6,000 42,750
Werner Enterprises, Inc. 3,000 54,000
------------------
------------------
442,687
------------------
------------------
TOTAL COMMON STOCKS (Cost $3,304,892) 3,008,932
------------------
Principal Value
MONEY MARKET SECURITIES - 9.4%
Star Treasury 4.83% 11/2/98 (Cost $306,131) $ 306,131 306,131
------------------
TOTAL INVESTMENTS - 101.7% (Cost $3,611,023) 3,315,063
Excess of liabilities over other assets (56,412)
------------------
TOTAL NET ASSETS - 100.0% $ 3,258,651
<FN>
==================
(a) non-income producing security
</FN>
</TABLE>
<TABLE>
<CAPTION>
Marathon Value Fund
Securities Sold Short - October 31, 1998
<S> <C> <C>
Short Options Shares Value
Dress Barn, Inc. 65 (4,469)
Dress Barn, Inc. 25 (5,850)
Tele-Communications, Inc. 30 (8,813)
Telxon Corp. 90 (35,437)
------------------
TOTAL OPTIONS (proceeds $45,075) $ (54,569)
==================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Marathon Value Fund October 31, 1998
Statement of Assets & Liabilities
<S> <C> <C>
Assets
Investment in securities, at value (cost $3,611,023) $ 3,315,063
Receivables:
Dividends 480
Interest 1,426
-----------------------
Total assets 3,316,969
Liabilities
Accrued investment advisory fee payable 3,749
Securities sold short, at value - proceeds $45,075 54,569
------------------
Total liabilities 58,318
-----------------------
Net Assets $ 3,258,651
=======================
Net Assets consist of:
Paid in capital $ 3,797,867
Accumulated undistributed net investment income 6,326
Accumulated undistributed net realized loss on security transactions (258,838)
Accumulated undistributed net realized gain on options transactions 18,750
Net unrealized appreciation (depreciation) on investments (305,454)
-----------------------
Net Assets, for 384,185 shares $ 3,258,651
=======================
Net Asset Value
Net Assets
Offering price and redemption price per share ($3,258,651/384,185) $ 8.48
=======================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Marathon Value Fund
Statement of Operations for the period March 12, 1998 (Commencement of Operations)
to October 31, 1998
<S> <C> <C>
Investment Income
Dividend Income $ 14,435
Interest Income 17,557
-----------------
Total Income 31,992
Expenses
Investment advisory fee $ 25,156
Trustees fees 510
----------------
Total Operating Expenses 25,666
-----------------
Net Investment Income (Loss) 6,326
-----------------
Realized & Unrealized Gain
Net realized gain (loss) on investment securities (258,838)
Net realized gain (loss) on options transactions 18,750
Change in net unrealized appreciation(depreciation (305,454)
on investment securities ---------------- -----------------
Net gain (loss) on investment securities (545,542)
-----------------
Net increase (decrease) in net assets resulting from operations $ (539,216)
=================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Marathon Value Fund
Statement of Changes in Net Assets
for the period March 12, 1998 (Commencement of Operations) to October 31, 1998
<S> <C>
Increase/(Decrease) in Net Assets
Operations
Net investment income (loss) $ 6,326
Net realized gain (loss) on investments (258,838)
Net realized gain (loss) on options transactions 18,750
Change in net unrealized appreciation (depreciation) (305,454)
---------------
Net Increase (Decrease) in net assets resulting from operations (539,216)
---------------
Share Transactions
Net proceeds from sale of shares 3,806,088
Shares redeemed (8,221)
---------------
Net increase (decrease) in net assets resulting from share transactions 3,797,867
---------------
Total increase in net assets 3,258,651
Net Assets
Beginning of period -
---------------
End of period [including undistributed net investment income of $6,326] $ 3,258,651
===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
for the period March 12, 1998 (Commencement of Operations) to October 31, 1998
Selected Per Share Data
<S> <C>
Net asset value, beginning of period $10.00
------------
Income from investment operations
Total from investment operations (1.52)
------------
Net asset value, end of period $8.48
============
Total Return -15.20%
Ratios and Supplemental Data
Net assets, end of period (000) $3,259
Ratio of expenses to
average net assets 1.(a)
Ratio of net investment income to
average net assets 0.(a)
Portfolio turnover rate 61.(a)
<FN>
(a) Annualized
</FN>
</TABLE>
MARATHON VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
NOTE 1. ORGANIZATION
Marathon Value Fund (the "Fund") was organized as a series of the AmeriPrime
Funds, an Ohio business trust (the "Trust"), on March 9, 1998 and commenced
operations on March 12, 1998. The Trust is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company, whose investment objective is to provide maximum long-term
capital appreciation. The Trust Agreement permits the trustees to issue an
unlimited number of shares of beneficial interest of separate series without par
value.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuation- Securities which are traded on any exchange or on the
NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking
a last sale price, a security is valued at its last bid price except when, in
the Advisor's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, when the Advisor determines the
last bid price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, in conformity with guidelines adopted by and subject to
review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Advisor believes such prices accurately reflect the fair market values of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. 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 of Trustees. Short-term investments in fixed
income securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
MARATHON VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
Federal Income Taxes- The Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.
Dividends and Distributions- The Fund intends to distribute substantially all of
its net investment income as dividends to its shareholders on an annual basis.
The Fund intends to distribute its net long-term capital gains and its net short
term capital gains at least once a year.
Other- The Fund follows industry practice and records security transactions on
the trade date. The specific identification method is used for determining gains
or losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrual
basis. Discounts and premiums on securities purchased are amortized over the
life of the respective securities.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains Burroughs & Hutchinson, Inc. (the "Advisor") to manage the
Fund's investments. Mark Matsko, the Fund's portfolio manager is primarily
responsible for the day to day management of the Fund's portfolio.
Under the terms of the management agreement, (the "Agreement"), the Advisor
manages the Fund's investments subject to approval of the Board of Trustees and
pays all expenses of the Fund except brokerage commissions, taxes, interest,
fees and expenses of non-interested person trustees, and extraordinary expenses.
As compensation for its management services and agreement to pay the Fund's
expenses, the Fund is obligated to pay the Advisor a fee computed and accrued
daily and paid monthly at an annual rate of 1.48% of the average daily net
assets of the Fund. It should be noted that most investment companies pay their
own operating expenses directly, while the Fund's expenses, except those
specified above, are paid by the advisor. For the period from March 12, 1998
(commencement of operations) through October 31, 1998, the Advisor has received
a fee of $25,156 from the Fund.
The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator") to
manage the Funds business affairs and provide the Fund with administrative
services, including all regulatory reporting and necessary office equipment and
personnel. For the period ended October 31, 1998, the Administrator received
fees of $17,500 from the Advisor for administrative services provided to the
Fund.
MARATHON VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
The Fund retains AmeriPrime Financial Securities, Inc. (the Distributor) to act
as the principal distributor of the Fund's shares. There were no payments made
to the Distributor for the period from March 12, 1998 (commencement of
operations) to October 31, 1998. Certain members of management of the
Administrator and the Distributor are also members of management of the
AmeriPrime Trust.
NOTE 4. CAPITAL SHARE TRANSACTIONS
As of October 31, 1998, there was an unlimited number of no par value shares
of capital stock authorized for the Fund. Paid in capital at October 31, 1998
was $3,797,867.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
For the period from
March 12, 1998 (Commencement of
Operations) through October 31, 1998
<S> <C> <C>
Shares Amount
--------- ----------
Shares sold 385,265 $3,806,088
Shares issued in reinvestment
of dividends - -
Shares redeemed (1,080) (8,221)
----------- --------------
Net increase 384,185 $3,797,867
======== ========
</TABLE>
NOTE 5. INVESTMENTS
For the period from March 12, 1998 (commencement of operations) through October
31, 1998, purchases and sales of investment securities, other than short-term
investments, aggregated $4,826,476 and $1,734,209, respectively. As of October
31, 1998, the gross unrealized appreciation for all securities totaled $183,201
and the gross unrealized depreciation for all securities totaled $488,655 for a
net unrealized depreciation of $305,454. The aggregate cost of securities for
federal income tax purposes at October 31, 1998 was $3,565,948.
MARATHON VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
NOTE 6. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 7. RELATED PARTY TRANSACTIONS
The Advisor is not a registered broker-dealer of securities and thus does not
receive commissions on trades made on behalf of the Fund. The beneficial
ownership, either directly or indirectly, of more than 25% of the voting
securities of a Fund creates a presumption of control of the Fund, under Section
2(a)(9) of the Investment Company Act of 1940. As of October 31, 1998, Charles
Schwab & Co. owned in aggregate more than 25% of the Fund.
NOTE 8. YEAR 2000 ISSUE
Like other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by the Advisor, Administrator or Servicers do not properly process and
calculate date-related information and data from and after January 1, 2000. This
is commonly known as the "Year 2000 Issue." The Advisor and Administrator have
taken steps that they believe are reasonably designed to address the Year 2000
Issue with respect to computer systems that are used and to obtain reasonable
assurances that comparable steps are being taken by each of the Fund's major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund.
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and Board of Trustees
Marathon Value Fund
We have audited the accompanying statement of assets and liabili- ties of
Marathon Value Fund (a member of the Ameriprime Fund series), including the
schedule of portfolio investments, as of October 31, 1998, and the related
statement of operations for the year then ended, and the statement of changes in
net assets, and financial highlights for the period from March 12, 1998
(commencement of operations) to October 31, 1998 in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held by
the custodian as of October 31, 1998, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Marathon Value Fund as of October 31, 1998, the results of its operations for
the year then ended, and the changes in its net assets, and the financial
highlights for the period from March 12, 1998 (commencement of operations) to
October 31, 1998 in the period then ended, in conformity with generally accepted
accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
November 9, 1998
<PAGE>
November 15, 1998
Dear Shareholders,
As you are aware, on October 16, 1998, the Board of Trustees of the AmeriPrime
Funds determined that the NewCap Contrarian Fund should no longer pursue its
investment objective and instead invest 100% of its assets in cash equivalents,
money market funds and investment grade debt securities. For the twelve months
ended October 31, 1998, the fund generated a total return of -44.60%. This
compares to a comparative benchmark index return of -1.39% (60% Standard &
Poor's Mid-cap 400 and 40% Philadelphia Gold and Silver Index).
The under- performance of the fund can be primarily attributed to the following
factors: The under-performance of the small and mid-cap stock index relative to
the broad market; the falling prices of stocks in the precious metal industry;
and the individual stock selection and concentration of stocks in each of these
areas.
As always, your questions and comments are welcome. We appreciate the support
you have provided.
Sincerely,
Kenneth D. Trumpfheller
President & Trustee
<PAGE>
Comparison of the Change in Value of $10,000 Investment in
NewCap Contrarian Fund, The Unmanaged S&P 400 Midcap Index, the Philadelphia
Gold & Silver Index and a composite of 60% S&P 400 Midcap Index and 40%
Philadelphia Gold & Silver
XAU Midcap Newcap Blend
5/5/96 10,000 10,000 10,000 10,000
6/30/96 8,529 10,095 9,460 9,469
9/30/96 7,950 10,391 9,580 9,415
12/31/96 8,080 11,021 9,010 9,844
3/31/97 7,218 10,857 7,650 9,401
6/30/97 6,738 12,314 8,570 10,084
9/30/97 7,732 14,293 9,470 11,669
10/31/97 6,210 13,671 8,760 10,687
12/31/97 5,257 14,411 7,833 10,749
3/31/98 5,794 15,997 9,098 11,916
6/30/98 5,098 15,654 6,075 11,431
9/30/98 5,341 13,391 4,428 10,171
10/31/98 5,374 14,585 4,853 10,901
<PAGE>
<TABLE>
<CAPTION>
New Cap Contrarian Fund
Schedule of Investments - October 31, 1998
<S> <C> <C>
Principal Amount Value
Money Market Securities - 61.5%
Star Treasury, 4.96%, 11/2/98 (Cost $220,240) $ 220,240 $ 220,240
Other assets less liabilites - 38.5% 137,928
------------------
TOTAL NET ASSETS - 100.0% $ 358,168
==================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New Cap Contrarian Fund October 31, 1998
Statement of Assets & Liabilities
<S> <C> <C>
Assets
Investment in securities, at value (cost $220,240) $ 220,240
Receivable for securities sold 143,128
Dividend receivable 122
Interest receivable 330
---------------------
363,820
Liabilities
Accrued advisory fee 1,045
Accrued trustees' fees 1,335
Accrued distribution fees 3,257
Other payables and accrued expenses 15
---------------
Total liabilities 5,652
---------------------
Net Assets $ 358,168
=====================
Net Assets consist of:
Paid in capital $ 1,333,179
Accumulated undistributed net realized gain(loss) (975,011)
Net unrealized (depreciation) on investments -
---------------------
Net Assets, for 87,229 shares $ 358,168
=====================
Net Asset Value
Net Assets
Offering price and redemption price per share ($358,168/87,229) $ 4.11
=====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New Cap Contrarian Fund
Statement of Operations for the year ended October 31, 1998
<S> <C> <C>
Investment Income
Dividend Income $ 6,190
Interest Income 1,806
-----------------
Total Income 7,996
Expenses
Investment Advisory $ 30,486
12-B1 fees 2,458
Trustees' fees 1,280
--------------
Total Expenses 34,224
-----------------
Net Investment Income (Loss) (26,228)
-----------------
Realized & Unrealized Gain (Loss)
Net realized gain (loss) on investment securities (964,807)
Net realized gain (loss) on options transactions 0
Change in net unrealized appreciation (depreciation) on investment securities 224,955
---------------
Net gain (loss) (739,852)
-----------------
Net increase (decrease) in net assets resulting from operations $ (766,080)
=================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New Cap Contrarian Fund
Statement of Changes in Net Assets
<S> <C> <C>
For the year For the year
ended ended
Increase/(Decrease) in Net Assets October 31, 1998 October 31, 1997
Operations
Net investment income (loss) $ (26,228) (44,549)
Net realized gain (loss) on securities transactions (964,807) 171,581
Net realized gain (loss) on options transactions - (75,762)
Change in net unrealized appreciation (depreciation) 224,955 (177,571)
--------------- ------------------
Net Increase (decrease) in net assets resulting from operations (766,080) (126,301)
--------------- ------------------
Distributions to shareholders:
From net capital gains (38,200) -
--------------- ------------------
Share Transactions
Net proceeds from sale of shares 56,807 762,466
Shares issued in reinvestment 38,200 -
Shares redeemed (614,657) (461,769)
--------------- ------------------
Net increase (decrease) in net assets resulting
from share transactions (519,650) 300,697
--------------- ------------------
Total increase (decrease) in net assets (1,323,930) 174,396
Net Assets
Beginning of period 1,682,098 1,507,702
--------------- ------------------
End of period [including net investment income (loss) of
of $(26,228) and $(44,549), respectively] $ 358,168 $ 1,682,098
=============== ==================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New Cap Contrarian Fund
Financial Highlights
<S> <C> <C> <C>
For the periods ended October 31 1998 1997 1996 (b)
Selected Per Share Data
Net asset value, $8.76 $9.21 $10.00
--------------- ------------ -------------
begining of period
Income from investment operations
Net investment income (0.15) (0.22) (0.05)
Net realized and unrealized gain (loss) (4.43) (0.23) (0.74)
--------------- ------------ -------------
Total from investment operations (4.58) (0.45) (0.79)
--------------- ------------ -------------
Less Distributions
From net capital gain (0.07) - -
--------------- ------------ -------------
Net asset value,
end of period $4.11 $8.76 $9.21
Total Return (51.76)% (4.89)% (15.(a)%
Ratios and Supplemental Data
Net assets, end of period (000) $358 $1,682 $1,508
Ratio of expenses to
average net assets 2.82% 2.83% 2.(a)
Ratio of net investment income to
average net assets (2.16)% (2.56)% (1.(a)%
Portfolio turnover rate 146% 92%(a)
<FN>
(a) Annualized
(b) May 2, 1996 (Commencement of Operations) to October 31, 1996. </FN>
</TABLE>
<PAGE>
NEW CAP CONTRARIAN FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
1. ORGANIZATION
New Cap Contrarian Fund (the "Fund") is a series of the AmeriPrime Funds, an
Ohio business trust (the "Trust"). The Trust is registered under the Investment
Company Act of 1940, as amended, as a non-diversified, open-end management
investment company. The investment objective of the Fund is provide maximum
long-term growth. The Trust Agreement permits the trustees to issue an unlimited
number of shares of beneficial interest of separate series without par value.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuation- Securities which are traded on any exchange or on the
NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking
a last sale price, a security is valued at its last bid price except when, in
the Advisor's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, and the Advisor determines the last
bid price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, in conformity with guidelines adopted by and subject to
review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Advisor believes such prices accurately reflect the fair market values of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. 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 of Trustees. Short-term investments in fixed
income securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
NEW CAP CONTRARIAN FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
Federal Income Taxes- The Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.
Dividends and Distributions- The Fund intends to distribute substantially all of
its net investment income as dividends to its shareholders on an annual basis.
The Fund intends to distribute its net long -erm capital gains and its net
short-term capital gains at least once a year.
Other- The Fund follows industry practice and records security transactions on
the trade date. The specific identification method is used for determining gains
or losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrual
basis. Discounts and premiums on securities purchased are amortized over the
life of the respective securities.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains Newport Investment Advisors, Inc. (the "Advisor") to
manage the Fund's investments. Kenneth M. Holeski, president and controlling
shareholder of the Advisor, is primarily responsible for the day to day
management of the Fund's portfolio.
Under the terms of the management agreement, (the "Agreement"), the Advisor
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of the Fund except 12b-1 fees, brokerage commissions,
taxes, interest, fees and expenses of non-interested person trustees, and
extraordinary expenses. As compensation for its management services and
agreement to pay the Fund's expenses, the Fund is obligated to pay the Advisor a
fee computed and accrued daily and paid monthly at an annual rate of 2.50% of
the average daily net assets of the Fund. It should be noted that most
investment companies pay their own operating expenses directly, while the Fund's
expenses, except those specified above, are paid by the Advisor. For the year
ended October 31, 1998, the Advisor received a fee of $30,486 from the Fund.
NEW CAP CONTRARIAN FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued The Fund retains
AmeriPrime Financial Services, Inc. (the "Administrator") to manage the Funds
business affairs and provide the Fund with administrative services, including
all regulatory reporting and necessary office equipment and personnel. For the
year ended October, 1998, the Administrator received fees of $30,000 from the
Advisor for administrative services provided to the fund.
The Fund retains AmeriPrime Financial Securities, Inc. (the Distributor) to act
as the principal distributor of the Fund's share. There were no payments made to
the Distributor for the year ended October 31, 1998. Certain members of
management of the Administrator and the Distributor are also members of
management of the AmeriPrime Trust.
NOTE 4. CAPITAL SHARE TRANSACTIONS
As of October 31, 1998, there was an unlimited number of no par value
shares of capital stock authorized for the Fund. Paid in capital at October 31,
1998 was $1,359,407.
Transactions in capital stock were as follows: For the years ended October 31:
<TABLE>
<S> <C> <C> <C> <C>
1998 1998 1997 1997
Shares Dollars Shares Dollars
Shares sold 7,565 $56,807 82,953 $762,466
Shares issued in
reinvestment of
dividends 5,107 - -
Shares redeemed 38,200
(117,468) (614,657) (54,641) (461,769)
--------- --------- -------- ---------
(104,796) $519,650 28,312 $300,697
</TABLE>
NOTE 5. INVESTMENTS
For the year ended October 31,1998, purchases and sales of investment
securities, other than short-term investments, aggregated $992,543 and
$1,961,009, respectively. At October 31, 1998 the fund had no unrealized
appreciation/depreciation. The aggregate cost of securities for federal income
tax purposes at October 31, 1998 was $220,240.
<PAGE>
NEW CAP CONTRARIAN FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
NOTE 6. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 7. RELATED PARTY TRANSACTIONS
The Advisor is not a registered broker-dealer of securities and thus does not
receive commissions on trades made on behalf of the Funds. The beneficial
ownership, either directly or indirectly, of more than 25% of the voting
securities of a Fund creates a presumption of control of the Fund, under Section
2(a)(9) of the Investment Company Act of 1940. As of October 31, 1998, Cheryl
Holeski (wife of the President and controlling shareholder of Newport Investment
Advisor) owns more than 25% of the Fund.
NOTE 8. RECLASSIFICATIONS
In accordance with SOP 93-2, the fund has recorded a reclassification in the
capital accounts. As of October 31, 1998 the fund recorded permanent book/tax
differences of $26,228 from undistributed net investment income to paid in
capital. This reclassification has no impact on the net asset value of the fund
and is designed generally to present undistributed income and realized gains on
a tax basis which is considered to be more informative to shareholders.
NOTE 9. Year 2000 Issue
Like other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by the Advisor, Administrator or Servicers do not properly process and
calculate date-related information and data from and after January 1, 2000. This
is commonly known as the "Year 2000 Issue." The Advisor and Administrator have
taken steps that they believe are reasonably designed to address the Year 2000
Issue with respect to computer systems that are used and to obtain reasonable
assurances that comparable steps are being taken by each of the Fund's major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and Board of Trustees
New Cap Contrarian Fund
We have audited the accompanying statement of assets and liabilities of New
Cap Contrarian Fund (a member of the Ameriprime Fund series), including the
schedule of portfolio investments, as of October 31, 1998, and the related
statement of operations, the statement of changes in net assets, and the
financial highlights for each of the periods indicated. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held by
the custodian as of October 31, 1998, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of New
Cap Contrarian Fund as of October 31, 1998, and the results of its operations,
the changes in its net assets, and the financial highlights for each of the
periods indicated, in conformity with generally accepted accounting princi-
ples.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
November 9, 1998
<PAGE>
Florida Street Funds
Report to Shareholders for the Year Ended October 31, 1998
Dear Fellow Shareholders,
The price action in the financial markets over the past two months spoke volumes
concerning the status of the global economy and financial system. The decline in
equities and the widening of high yield spreads over Treasuries had fear of
recession written all over them. The tremendous rally in U.S. Treasuries left
almost all other fixed-income instruments in the dust on the road to safer
havens. The entire process was a clear case of "flight to quality". The prices
of capital-dependant equities declined sharply, spelling out in capital
letters-CREDIT CRUNCH.
All of these responses have been quite rational. All that was necessary to join
the selling was a relatively short investment holding period. This
characteristic will prove key because the current news is bad and more is
visible on the horizon. Fortunately however, the forces of equilibrium are
already in motion. Let's review the bad news first.
The U.S. export sector is under great pressure from contractions underway
in Far Eastern economies and imminent in several South American countries.
The contribution to economic growth should be nil in the near-term.
A general slowdown in capital expenditures is likely given current demand
weakness and multiple years of high spending behind us.
An erosion in revenue growth is plaguing U.S. corporations. With S&P 500
revenue growth now slightly negative, unit growth and cost reductions are
the only route to higher earnings.
With near-term pressure on corporate earnings intensifying, bottom-up estimates
in the financial community remain too high for 1999. A drift toward reality is
underway, which is healthy. But this correction could be a nagging burden for
equities near-term. If we do no further analysis, the equity market's 17%
recovery from its trough on 8/31/98 seems premature at best.
It may indeed be early in its speed and magnitude. But it is entirely rational
in our view. There are many signs indicating the emergence of forces whose
effect will be to counter the squeeze on corporate earnings and economic growth.
Short-term interest rates are plummeting. In response, mortgage
refinancing activity has hit new highs. Each refinancing creates more
income for discretionary consumer spending or saving.
The Fed has declared war on the credit crunch with 75 basis points of
easing in the past seven weeks, including a surprise easing between monthly
meetings, apparently to ensure the markets got the message. The important
point is that the Fed has shifted 180 degrees from a bias toward
restricting credit to one of accelerated easing in a matter of months.
Inflation continues at a very subdued pace. We have long argued that a
year of sub-2% inflation is positive for equities, but the prospect of
multiple years of low inflation can have an effect on equity valuations
similar to accelerants on fires. With import prices declining all around
us, prices should remain fairly stable.
The dollar's strongest increase over the currencies of our major trading
partners is behind us. It will continue to affect corporate earnings into
the first half of 1999, but should become neutral to corporate earnings
thereafter.
Signs are appearing that indicate a slowing in the red-hot U.S. labor
market. This has been a major concern of the Fed and a threat to profit
margins during an economic slowdown.
The factors that have roiled the capital markets are real and have not yet run
their course. However, ignoring the emergence of new positives is equally
shortsighted. We recommend that investors with longer investment horizons stay
the course with their allocations to the equity and fixed income markets.
Sincerely,
The staff of Commonwealth Advisors, Inc.
<PAGE>
Florida Street Bond Fund
Report to Shareholders for the fiscal year ended October 31, 1998
The first full fiscal year for the Florida Street Bond Fund began uneventfully.
Bonds delivered fairly normal returns with volatility greater than risk-free
investments but lower than equities. During the final quarter of the year,
financial markets experienced a flight to quality that increased corporate bond
yield premiums to levels not seen in many years. During the past two years,
corporate bonds have yielded approximately 350 basis points over U.S. Treasury
bonds. By the end of October, the spread rose to nearly 700 basis points. The
increase in risk premiums was not limited to high yield bonds. The spread on
investment grade (high quality) bonds rose to nearly 270 basis points over U.S.
Treasury bonds. This is the highest spread level since 1986 and higher than in
the 1990-91 recession. Even mortgage -backed securities issued by the Federal
Home Loan Mortgage Corporation (FHLMC) fell in price to yield nearly 200 basis
points over U.S. Treasuries. They had yielded 125 basis points over Treasuries
at the beginning of the fiscal year.
-----------------------------------------------------------------
Returns for the Periods Ended 10/31/98
-----------------------------------------------------------------
Average Annual
Return Since Inception
Fund/Index One year August 4, 1997
Florida Street Bond Fund (1.20)% (0.25)%
Merrill Lynch High Yield Index 1.00% 2.85%
Month Ended MLHY FSB
8/4/97 $10,000.00 $10,000.00
8/30/97 $10,020.60 $ 9,970.00
9/30/97 $10,200.87 $10,099.61
10/31/97 $10,252.90 $10,089.51
11/30/97 $10,345.17 $10,079.37
12/31/97 $10,425.86 $10,164.57
1/31/98 $10,613.53 $10,307.44
3/1/98 $10,675.09 $10,300.73
3/31/98 $10,783.97 $10,376.30
4/30/98 $10,824.95 $10,447.03
5/31/98 $10,955.93 $10,363.70
6/30/98 $10,957.03 $10,384.50
7/31/98 $11,065.50 $10,553.69
8/31/98 $10,394.93 $10,048.09
9/30/98 $10,513.44 $ 9,979.33
10/31/98 $10,354.68 $ 9,839.84
The chart shows the value of a hypothetical initial investment of $10,000 in the
Fund and the Merrill Lynch High Yield Index on August 4, 1997 and held through
October 31, 1998. The Merrill Lynch High Yield Index is a widely recognized
unmanaged index of non-investment grade U.S. domestic bonds. Performance figures
include the change in value of the bonds in the index, reinvestment of
dividends, and are not annualized. The index return does not reflect expenses,
which have been deducted from the Fund's return. THE FUND'S RETURN REPRESENTS
PAST PERFORMANCE AND IS NOT PREDICTIVE OF FUTURE RESULTS.
The widening of spreads on corporate bonds reflects an increased risk premium
demanded by investors. This has been blamed on numerous factors- the turmoil in
foreign markets, the economic crisis in Russia, and the collapse of many hedge
funds, to name a few. While these factors are important to analyze, it is also
possible that yield spreads rose because they were simply too low.
The Florida Street Bond Fund was not immune to these events. The fund posted a
total return of (1.20)% for the year versus 1.00% for the Merrill Lynch High
Yield Index. The fund distributed $0.85 in dividends per unit during the year,
and the net asset value per unit on 10/31/98 was $9.16. The SEC yield at
year-end was 11.22%. The aforementioned widening of yield spreads caused many of
the bonds held by the fund to decline in value.
Stock prices also declined towards the end of the fiscal year. Investors are
becoming concerned that corporate profits are not growing sufficiently to
justify current stock prices. We are also concerned about the possibility of a
recession and the instability of the world financial markets. The recent easing
moves by the Federal Reserve and the continued high level of consumer confidence
bodes well for the domestic economy. We acknowledge the dampened outlook for
corporate profits, but we do not believe this crisis will result in a deep
recession. A mild recession, generally referred to as a profit recession, is
more likely. We do not expect this will have a substantially negative effect on
corporate bonds because we believe the bond market has already discounted such
an economic landscape.
Going forward, we expect less volatile performance. Many sectors of the bond
market have declined during the year and we expect recovery in several of them.
We are focusing on the telecommunications and energy sectors, where we find much
value. We expect to increase our exposure to these sectors, as well as to the
consumer services sector.
Thank you for your support.
Walter A. Morales CFA
Portfolio Manager
<PAGE>
<TABLE>
<CAPTION>
Florida Street Bond Fund
Schedule of Investments - October 31, 1998
<S> <C> <C>
Common Stock - 0.8% Shares Value
Golden State Bancorp Litigation Warrants 25,000 $ 121,875
JPS Textile Group, Inc. 8,245 45,348
-------------------
TOTAL COMMON STOCK (Cost $209,931) 167,223
-------------------
Preferred Stock - 1.6%
Phone Tel Technologies (Cost $216,000) 4,000 312,000
-------------------
Par
Corporate Bonds - 79.0% Value Value
Allied Waste Industries, 0%, 6/1/07 (a) 150,000 $ 112,500
American Eco Corp., 9.625%, 5/15/08 500,000 396,250
American Restaurant, 11.50%, 2/15/03 500,000 452,500
American Rice, Inc., 13%, 7/31/02 (b) 270,000 157,950
Amresco, 10%, 3/15/04 110,000 66,550
Amscan Holdings, Inc., 9.875%, 12/15/07 (c) 250,000 201,250
Bally Total Fitness Holding Series B, 9.875%, 10/15/07 150,000 136,500
Beazer Homes USA, 8.875%, 4/1/08 250,000 228,750
Bigco Productions, 12%, 3/1/25 (e) 100,000 40,000
Brazos Sportswear, Inc., 10.50%, 7/1/07 350,000 134,750
Brauns Fashions, 12%, 1/1/05 445,000 440,550
Building Materials Corp., 8%, 10/15/07 (c) 100,000 95,500
CD Radio, Inc., 0%,12/1/07 (a) 250,000 120,000
Cafeteria Operators, 12%, 12/31/01 250,000 236,875
Callon Petroleum, 10%, 12/15/01 145,000 139,744
Cirrus Logic, Inc., 6%, 12/15/03 205,000 138,119
Cleveland Electric Illumination, 9%, 7/1/23 70,000 77,649
Covad Communications Group, 0%, 3/15/08 (a) 250,000 86,250
Dairy Mart Stores, 10.25%, 3/15/04 20,000 18,500
DiGiorgio Corp., 10%, 6/15/07 100,000 91,750
Emcor (EMCG) Group, Inc., 5.75%, 4/1/05 500,000 411,875
Edison Brothers Stores, 11%, 9/26/07 600,000 369,000
Equimar Shipholding, 9.875%, 7/1/07 250,000 193,750
Executive Risk Cap Trust, 8.675%, 2/1/27 200,000 200,479
Global Star, 11.25%, 6/15/04 135,000 91,125
Hill Stores Co., 12.50%, 7/1/03 500,000 196,875
Homeland Stores, Inc., 10%, 8/1/03 595,000 532,525
Integrated Health Services, 9.25%, 1/15/08 250,000 228,750
Intrawest Corp., 9.75%, 8/15/08 500,000 498,750
Iridium Capital Series B, 14%, 7/15/05 300,000 256,500
Iron Mountain, Inc., 8.75%, 9/30/09 100,000 99,500
Jackson Products, Inc., 9.50%, 4/15/05 125,000 119,375
K Mart Corp., 8%, 12/13/01 15,000 15,367
Mail-Well, Inc., 5%, 11/1/02 250,000 223,125
Mastellone Hermanos, 11.75%, 4/1/08 250,000 150,000
Maxim Group, Inc., 9.25%, 10/15/07 150,000 143,250
McLeod USA, Inc., 0%, 3/1/07 (a) 150,000 107,250
McMillin Cos. LLC, 13%, 8/31/06 1,020,000 1,020,000
Microcell Telecom, 0%, 6/1/06 (a) 300,000 193,500
Florida Street Bond Fund
Schedule of Investments - October 31, 1998 - continued
Par
Corporate Bonds - continued Value Value
Mrs. Fields Orig., 10.125%, 12/1/04 350,000 $ 313,250
National Equipment, 10%, 11/30/04 (c) 150,000 129,750
Niagra Mohawk Power Corp., 9.50%, 3/1/21 250,000 266,226
Ocean Energy, Inc., 7.625%, 7/1/05 435,000 419,775
Packaged Ice, Inc., 9.75%, 2/1/05 750,000 686,250
Paging Net Brasi, 13.50%, 6/6/05 200,000 120,500
Pamida, Inc., 11.75%, 3/15/03 150,000 145,500
Pathmark Stores, 0%, 11/1/03 (a) 250,000 183,750
Perkins Family Restaurants, 10.125%, 12/15/07 (c) 80,000 83,600
Petroleum Heat & Power, 12.25%, 2/1/05 100,000 96,500
Phar-Mor, Inc., 11.72%, 9/11/02 65,000 64,512
Pride International, Inc., 6.25%, 2/15/06 250,000 263,750
Prudential Home Mortgage Securities, 9.9207%, 12/25/23 168,804 166,342
RCN Corp., 0%, 2/15/03 (a) 250,000 126,250
Ram Energy, 11.50%, 2/15/08 500,000 412,500
Revlon Consumer Products, 8.625%, 2/1/08 (c) 310,000 281,325
Rockfeller Center, 0%, 12/31/00 165,000 124,575
Service Merchandise, 9%, 12/15/04 1,596,000 774,060
Speciality Foods Corp.:
11.25%, 8/15/03 255,000 116,025
0%, 8/15/05 (a) 250,000 17,500
Telewest PLC, 0%, 10/1/07 (a) 250,000 200,000
Tops Appliance, 6.50%, 11/30/03 150,000 90,000
Transamerica Energy, 11.50%, 6/15/02 350,000 124,250
Trico Marine Services, 8.50%, 8/1/05 355,000 296,425
Tricon Global Restaurant:
7.45% 5/15/05 300,000 306,008
7.65% 5/15/08 405,000 422,214
Trump Atlantic Association Funding, Inc., 11.25%, 5/2/06 100,000 87,375
Unisys Corp., 7.875%, 4/1/08 55,000 55,550
United Refining Co., 10.75%, 6/15/07 220,000 144,100
Webb Dell, 9.375%, 5/1/09 180,000 167,400
Wright Medical Technology, 11.75%, 7/1/00 260,000 264,750
Zilog, Inc., 9.5%, 3/1/05 500,000 365,000
-------------------
TOTAL CORPORATE BONDS (Cost $17,919,390) 15,737,945
-------------------
Convertible Bonds - 1.3%
HIH Capital Ltd., 7.50%, 9/25/06 (c) 250,000 158,438
Lechters, Inc., 5%, 9/27/01 150,000 103,500
-------------------
TOTAL CORPORATE BONDS (Cost $337,271) 261,938
-------------------
Florida Street Bond Fund
Schedule of Investments - October 31, 1998 - continued
U.S. Government Obligations - 17.7%
Fannie Mae:
Series 1993-121 PH, 7%, 1/25/19 11,193,936 1,011,450
Series 1993-167 SE, 5.094%, 9/25/23 (d) 82,094 82,093
Series 1993-217 H, 0%, 8/25/23 1,105,363 704,606
Series 1993-94 S, 6.615%, 5/25/23 99,648 92,234
Series 1994-51 SA, 0%, 3/25/24 100,000 89,751
Series 1995-10 PC, 0%, 12/25/23 204,504 149,593
Freddie Mac:
Series 1496 PA, 7.642%, 8/15/22 (d) 170,109 170,704
Series 1591 SH, 0%, 9/15/22 100,000 97,184
Series 1629 OE, 10%, 12/15/23 240,000 262,491
Series 1652 SC, 8.896%, 6/15/23 (d) 115,153 118,877
Series 1856 SA, 3.0625%, 3/15/24 18,888,750 750,148
-------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (Cost $2,877,156) 3,529,131
-------------------
-------------------
TOTAL INVESTMENTS - 100.3% (Cost $21,559,749) 20,008,237
-------------------
Other Assets less liabilities - (0.3)% (79,640)
-------------------
TOTAL NET ASSETS - 100.0% 19,928,597
===================
<FN>
Legend
(a) Security initially issued in zero coupon form which converts to coupon form
at a specified rate and date. The coupon rate shown is the rate at October
31, 1998.
(b) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code.
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
1998, the value of these securities amounted to $949,863 or 4.8% of net
assets.
(d) Floating rate security; the coupon rate shown represents the rate at October
31, 1998.
(e) Security not registered under the Securities Act of 1933. This security is
subject to legal or contractual restrictions on resale. At the end of the
period, restricted securities amounted to $40,000 or 0.2% of net assets.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Florida Street Bond Fund October 31, 1998
Statement of Assets & Liabilities
<S> <C> <C>
Assets
Investment in securities, at value (cost $21,559,749) $ 20,008,237
Receivables:
Interest receivable 589,720
--------------------
Total assets 20,597,957
Liabilities
Payable to custodian bank 482,346
Accrued advisory fee 11,511
Dividends payable 175,503
------------------
Total liabilities 669,360
--------------------
Net Assets $ 19,928,597
====================
Net Assets consist of:
Paid in capital $ 21,423,526
Accumulated undistributed net investment income (14,436)
Accumulated undistributed net realized gain (loss) on investments 71,019
Net unrealized depreciation on investments (1,551,512)
--------------------
Net Assets, for 2,175,757 shares $ 19,928,597
====================
Net Asset Value
Net Assets
Offering price and redemption price per share ($19,928,597/2,175,757) $ 9.16
====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Florida Street Bond Fund
Statement of Operations for the year ended October 31, 1998
<S> <C> <C>
Investment Income
Dividend Income $ 27,268
Interest Income 1,300,040
---------------------
Total Income 1,327,308
Expenses
Advisory fee $ 103,800
Trustees fees 954
--------------------
Total Expenses 104,754
---------------------
Net Investment Income 1,222,554
---------------------
Realized & Unrealized Gain (Loss)
Net realized gain (loss) on investment securities 71,019
Change in net unrealized appreciation
(depreciation) on investment securities (1,591,571)
--------------------
Net gain (loss) (1,520,552)
---------------------
Net increase (decrease) in net assets resulting from operations $ (297,998)
=====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Florida Street Bond Fund
Statement of Changes in Net Assets
<S> <C> <C>
For the year For the period
ended ended
October 31, 1998 October 31, 1997 (a)
Increase in Net Assets
Operations
Net investment income $ 1,222,554 105,474
Net realized gain (loss) on securities transactions 71,019 (97,781)
Change in net unrealized appreciation (1,591,571) 40,059
------------------ ---------------
Net Increase in net assets resulting from operations (297,998) 47,752
------------------ ---------------
Distributions to shareholders:
From net investment income (1,237,025) (7,658)
From net realized gain - -
Return of capital - (97,781)
------------------ ---------------
Total distributions (1,237,025) (105,439)
Share Transactions
Net proceeds from sale of shares 13,541,571 7,463,588
Shares issued in reinvestment 1,166,552 -
Shares redeemed (533,511) (116,893)
------------------ ---------------
Net increase in net assets resulting
from share transactions 14,174,612 7,346,695
------------------ ---------------
Total increase in net assets 12,639,589 7,289,008
Net Assets
Begining of period 7,289,008 -
------------------ ---------------
End of period [including undistributed net
investment income of $1,389 and $35, respectively] $ 19,928,597 $ 7,289,008
================== ===============
<FN>
(a) For the period August 4, 1997 (commencement of operations) to October 31, 1997
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Florida Street Bond Fund
Financial Highlights
<S> <C> <C>
For the year For the period
Selected Per Share Data ended ended
October 31, 1998 October 31, 1997 (b)
Net asset value, beginning of period $9.95 $10.00
---------------- -------------
Income from investment operations
Net investment income 0.85 0.21
Net realized and unrealized gain(loss) (0.79) (0.12)
---------------- -------------
Total from investment operations 0.06 0.09
---------------- -------------
Less Distributions
From net investment income (0.85) (0.02)
From net realized gain(loss) 0.00 (0.12)
---------------- -------------
---------------- -------------
Total distributions (0.85) (0.14)
---------------- -------------
================ =============
Net asset value, end of period $9.16 $9.95
================ =============
Total Return -1.20% 3.(a)
Ratios and Supplemental Data
Net assets, end of period (000) $19,929 $7,289
Ratio of expenses to average net assets 0.75% 0.(a)
Ratio of net investment income to average net assets 8.73% 3.(a)
Portfolio turnover rate 10.45% 60.(a)
<FN>
(a) Annualized
(b) For the period August 4, 1997 (commencement of operations) to October 31, 1997
</FN>
</TABLE>
<PAGE>
Florida Street Growth Fund
Report to Shareholders for the Year Ended October 31, 1998
Dear Fellow Shareholders,
As shown in the graph below, fiscal 1998 was a turbulent year for the equity
market. Following a strong first half, the market began showing signs of
weakness in May and this trend became more prevalent as the year progressed. By
late August nearly all segments of the market were in a sharp correction. Small
and mid-sized issues were hurt more than large, liquid ones despite the fact
that they had been generally weak and not subject to much profit taking. In
October, a broad rebound occurred, especially in smaller issues.
-----------------------------------------------------------------
Returns for the Periods Ended 10/31/98
-----------------------------------------------------------------
Average Annual
Return Since Inception
Fund/Index 1 Year August 6, 1997
- ---------- ------ --------------
Florida Street Growth Fund (9.73)% (6.48)%
S&P 400 Midcap Index 6.69% 5.00%
S&P 600 Smallcap Index (11.06)% (5.73)%
FSG S&Pmid S&PSml
Period Cum. Rtn Cum. Rtn Cum. Rtn
Ended Factor Factor Factor
8/6/97 $10,000 $10,000 $10,000
08/31/97 $9,900 $9,848 $10,240
09/30/97 $10,550 $10,414 $10,917
10/30/97 $10,340 $9,961 $10,446
11/30/97 $10,120 $10,108 $10,337
12/31/97 $10,090 $10,500 $10,579
01/30/98 $9,939 $10,300 $10,373
02/28/98 $10,702 $11,153 $11,317
03/31/98 $11,214 $11,655 $11,749
04/30/98 $11,365 $11,868 $11,818
05/31/98 $10,803 $11,334 $11,192
6/30/98 $10,712 $11,405 $11,224
7/31/98 $10,200 $10,963 $10,366
8/31/98 $8,122 $8,924 $8,368
9/30/98 $8,634 $9,756 $8,879
10/31/98 $9,196 $10,627 $9,291
The chart shows the value of a hypothetical initial investment of $10,000 in the
Fund, the S&P 400 Midcap Index and the S&P 600 Smallcap Index on August 6, 1997
and held through October 31, 1998. The S&P 400 MidCap Index and the the S&P 600
Smallcap Index are widely recognized unmanaged indices of common stock prices.
Performance figures include the change in value of the stocks in the indices,
reinvestment of dividends, and are not annualized. The index returns do not
reflect expenses, which have been deducted from the Fund's return. THE FUND'S
RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF FUTURE RESULTS.
However, despite the rebound most investors would not consider the preceding
twelve months rewarding. Only those holding the 50-60 largest company stocks
were likely to have double digit returns for the year ended 10/31/98.
How did the Florida Street Growth Fund perform in this environment?
The fund experienced a loss of -9.73% during the year ended October 31, 1998.
Benchmarks for comparison include the S&P 400 Midcap Index which earned a
positive return of 6.7%, and the S&P 600 Smallcap Index which declined 11.1%
during the year . The primary factor in the fund's decline is its holdings of
small and midcap stocks. Size has continued to be the most important factor
influencing returns in the stock market. The larger, more liquid stocks have led
the market with the highest returns, on average. We have avoided most of these
stocks due their rich prices which , in our opinion, hinder future returns.
What other factors influenced results during the year?
Turmoil in the global financial markets hurt performance, especially during the
last quarter. Though we are careful about the price we pay for shares, we
recognize that any stock can fall 20-30% at any time for very little reason.
However, it is unlikely that shares of all companies will fall 20-30% at the
same time without negative company-specific reasons. The exception is during
world crises when traders are given a compelling excuse to sell almost any
stock.
Which stocks and sectors had the greatest influence on fund results during the
year?
Several small company stocks exerted downward pressure on the fund as they
succumbed to investors preference for size and liquidity over value. Iteq Inc.,
a consolidator of pollution control and pressure vessel manufacturers, declined
approximately 75% from its original purchase price. Several energy service
stocks, including Input Output, Pride International and Superior Energy Services
continued falling until late in the year. While most financial stocks held up
well, exceptions were Amresco and Sirrom Capital, which underwent significant
declines. Sirrom was sold due to a deteriorating outlook. Amresco has a strong
management team and good prospects. It is one of the funds larger holdings.
Results were helped by a strong showing by technology stocks, a sector we have
overweighted. Oracle Corp. and Qlogic were particularly strong performers for
your fund.
What are the fund's ten largest holdings as of the end of the fiscal year?
---------------------------------------------------
Top Ten Holdings
Security Name % of Fund
NAV
American Express
2.93
Cisco Systems
2.56
Fannie Mae
2.56
Oracle Corp.
2.49
Allied Capital Corp.
2.48
MBNA Corp.
2.40
MCI Worldcom 2.33
Protective Life
2.23
Amresco Inc.
2.19
Kimberly Clark 2.18
24.35
---------------------------------------------------
How is the fund positioned for the market environment ahead?
Having resigned ourselves to endure volatile performance during the rare and
short periods when world events are so unsettled that markets overreact to
current events, we have used this volatility to better anchor the fund with
several large capitalization stocks listed in the table above. We have also
increased the mid-cap portion of the fund due to the increased liquidity of
these issues versus small caps. Mid-cap stocks now comprise approximately forty
percent of the fund's net assets. Small cap exposure has been reduced somewhat
though we will continue to invest in these stocks because they offer high
potential returns according to our research. We believe the equity market will
offer returns at or slightly below the long term historical average in the
foreseeable future. Midsize and small company stocks are expected to exceed the
average returns of the larger stocks. The fund is being positioned to benefit
from this trend. We have and will continue to reduce the range of company sizes
in the fund while emphasizing mid-cap stocks, which offer the best combination
of potential return and risk in the market today.
Thank you for your support.
Richard L. Chauvin, Jr. CFA
<PAGE>
<TABLE>
<CAPTION>
Florida Street Growth Fund
Schedule of Investments - October 31, 1998
<S> <C> <C>
Common Stock - 95.0% Shares Value
Banks & Bank Holding Companies -5.3%
Carolina First Corp. 1,500 $ 34,594
CCB Financial Corp. 800 42,100
First Tennessee National Corp. 1,200 38,025
National Commerce Bancorporation 1,000 17,750
Regions Financial Corp. 1,200 44,400
---------------
176,869
---------------
Capital Equipment & Services - 7.5%
Applied Materials, Inc. (a) 900 31,219
Allied Signal, Inc. 1,050 40,884
Deere & Co. 1,500 53,062
Illinois Tool Works, Inc. 700 44,888
Iteq, Inc. (a) 13,500 36,281
NCI Buildings Systems (a) 2,000 43,250
---------------
249,584
---------------
Consumer Cyclicals - 8.5%
Consolidated Stores Corp. (a) 1,100 18,081
Dollar General Corp. 781 18,646
Edison Brothers Stores, Inc. (a) 4,500 10,125
Fastenal Co. 1,200 43,350
Ford Motor Company, Inc. 1,100 59,675
Goody's Clothing, Inc.(a) 1,500 16,031
Lowe's Companies 1,000 33,688
Palm Harbor Homes, Inc. (a) 1,900 47,975
Saks Incorporated (a) 1,500 34,125
---------------
281,696
---------------
Consumer Services - 10.1%
Acxiom Corp. (a) 1,200 30,150
Carnival Corp. Class A 1,200 38,850
Cendant Corp. (a) 3,020 34,541
Kimberly Clark Corp. 1,500 72,375
Landry's Seafood Restaurants, Inc. (a) 1,000 8,375
Metamor Worldwide, Inc. (a) 1,200 30,825
Modis Professional Services (a) 4,100 72,262
NCO Group, Inc. (a) 1,500 47,250
---------------
334,628
---------------
Consumer Non - Durables - 6.5%
Gillette Company 1,400 62,912
Pepsico, Inc. 500 16,875
Performance Food Group Co. (a) 900 21,825
Richfood Holdings, Inc. 1,350 23,962
SCP Pool Corp. (a) 3,075 42,666
U.S. Foodservice, Inc. (a) 1,000 47,500
---------------
215,740
---------------
Florida Street Growth Fund
Schedule of Investments - October 31, 1998 - continued
Common Stock - continued Shares Value
Energy Sector - 3.9%
Core Laboratories (a) 1,200 27,075
Gulf Island Fabric (a) 1,400 20,125
Input/Output, Inc. (a) 2,300 20,413
Mobil Corp. 300 22,706
Newpark Resources, Inc. (a) 1,600 15,100
Pride International, Inc. (a) 2,050 23,831
---------------
129,250
---------------
Financial Services - 18.2%
Allied Capital Corp. 4,400 82,500
American Express Co. 1,100 97,213
Amresco, Inc. 10,500 72,844
Capital RE 700 12,819
Fannie Mae 1,200 84,975
Fleet Financial Group, Inc. 1,500 59,906
Interstate/Johnson Lane, Inc. 550 16,844
Lehman Brothers Holdings, Inc. 200 7,588
MBNA Corp. 3,487 79,547
Protective Life Corp. 2,000 74,125
Raymond James Financial, Inc. 750 17,203
---------------
605,564
---------------
Health Care - 5.2%
American Home Products Corp. 700 34,125
Bristol-Myers Squibb Co. 600 66,338
Diagnostic Health Services (a) 1,450 5,438
HBO & Company 1,000 26,250
IMS Health, Inc. 600 39,900
---------------
---------------
172,051
---------------
Natural Resources/Basic Materials - 0.5%
IMC Global, Inc. 600 15,600
---------------
REIT - 2.4%
Colonial Properties Trust 1,400 38,500
Post Properties, Inc. 1,100 42,556
---------------
---------------
81,056
---------------
Technology Sector - 20.0%
Cisco Systems, Inc. (a) 1,350 85,050
Compaq Computer Corp. 1,200 37,950
Concord EFS, Inc. (a) 1,850 52,725
Cotelligent Group, Inc. (a) 2,000 37,750
Datastream Systems (a) 1,000 10,063
Dycom Industries (a) 1,500 52,594
Nova Corporation (a) 858 24,775
Oracle Corp. (a) 2,800 82,775
Qlogic Corp. (a) 500 46,187
SCI Systems, Inc. (a) 1,000 39,500
Tech Data Corp. (a) 1,000 39,375
Tellabs Inc. (a) 1,304 71,720
World Access, Inc. (a) 1,100 23,512
Xerox Corp. 600 58,125
---------------
---------------
662,101
---------------
Florida Street Growth Fund
Schedule of Investments - October 31, 1998 - continued
Common Stock - continued Shares Value
Transportation/Commercial - 1.3%
ASA Holdings, Inc. 1,200 43,050
---------------
Telecommunications - 4.7%
Alltel Corp. 900 42,131
Frontier Corp. 1,200 36,075
MCI WorldCom, Inc. (a) 1,400 77,350
---------------
---------------
155,556
---------------
Utilities - 0.9%
Consolidated Natural Gas Co. 550 29,047
---------------
Total Common Stock (Cost $3,243,211) 3,151,792
---------------
Principal Amount
Convertible Bonds - 0.6%
Premiere Technologies, 5.75%, 7/1/04 (Cost $43,478) $ 40,000 21,200
---------------
Money Market Securities - 4.4%
Star Treasury, 4.86%, 11/2/98 (Cost $145,888) 145,888 145,888
---------------
TOTAL INVESTMENTS - 100.0% (Cost $3,432,577) 3,318,880
Other Assets less liabilities - 0.0% 1,091
---------------
Total Net Assets - 100.0% $ 3,319,971
===============
<FN>
(a) non-income producing
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Florida Street Growth Fund October 31, 1998
Statement of Assets & Liabilities
<S> <C> <C>
Assets
Investment in securities, at value (cost $3,432,577) $ 3,318,880
Receivables:
Dividends 3,226
Interest 1,252
--------------------
Total assets 3,323,358
Liabilities
Accrued advisory fee payable 3,387
------------------
Total liabilities 3,387
--------------------
Net Assets $ 3,319,971
====================
Net Assets consist of:
Paid in capital $ 3,731,077
Accumulated undistributed net investment income 4,693
Accumulated undistributed net realized gain (loss) on investments (302,102)
Net unrealized appreciation (depreciation) on investments (113,697)
--------------------
Net Assets, for 362,562 shares $ 3,319,971
====================
Net Asset Value
Net Assets
Offering price and redemption price per share ($3,319,971/362,562) $ 9.16
====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Florida Street Growth Fund
Statement of Operations for the year ended October 31, 1998
<S> <C> <C>
Investment Income
Dividend Income $ 22,849
Interest Income 18,779
-------------------
Total Income 41,628
Expenses
Advisory fee $ 34,640
Trustees fees 954
------------------
Total Expenses 35,594
-------------------
Net Investment Income (Loss) 6,034
-------------------
Realized & Unrealized Gain (Loss)
Net realized gain (loss) on investment securities (295,878)
Change in net unrealized appreciation (depreciation) on investment securities (146,025)
-------------------
Net gain (loss) on investment securities (441,903)
-------------------
Net increase (decrease) in net assets resulting from operations $ (435,869)
===================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Florida Street Growth Fund
Statement of Changes in Net Assets
<S> <C> <C>
For the year For the period
ended ended
October 31, 1998 October 31,1997 (a)
Increase in Net Assets
Operations
Net investment income $ 6,034 $ 5,346
Net realized gain(loss) on securities transactions (295,878) (4,612)
Change in net unrealized appreciation (depreciation) (146,025) 32,328
------------------- -------------------
Net Increase (Decrease) in net assets resulting
-------------------
from operations (435,869) 33,062
------------------- -------------------
Distributions to shareholders:
From net investment income (2,075) -
From net realized gain (6,224) -
------------------- -------------------
Total Distributions (8,299) -
Share Transactions
Net proceeds from sale of shares 1,857,985 2,127,711
Shares issued in reinvestment 8,299 -
Shares redeemed (219,626) (43,292)
------------------- -------------------
Net increase in net assets resulting
from share transactions 1,646,658 2,084,419
------------------- -------------------
Total increase in net assets 1,202,490 2,117,481
Net Assets
Begining of period 2,117,481 -
------------------- -------------------
End of period [including undistributed net investment
income of $4,693 and $5,346]. $ 3,319,971 $ 2,117,481
=================== ===================
<FN>
(a) August 6, 1997 (commencement of operations) to October 31, 1997
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Florida Street Growth Fund
Financial Highlights
<S> <C> <C>
For the year For the period
Selected Per Share Data ended ended
October 31, 1998 October 31, 1997 (b)
Net asset value, beginning of period $ 10.19 $ 10.00
------------ -------------
Income from investment operations
Net investment income 0.02 0.03
Net realized and unrealized gain (loss) (1.01) 0.16
------------ -------------
Total from investment operations (0.99) 0.19
------------ -------------
Less Distributions
From net investment income (0.01) -
From net realized gain (loss) (0.03) -
------------ -------------
Total Distributions (0.04) -
------------ -------------
Net asset value, end of period $ 9.16 $ 10.19
============ =============
Total Return (9.73%) 7.(a)
Ratios and Supplemental Data
Net assets, end of period (000) $3,320 $2,117
Ratio of expenses to
average net assets 1.25% 1.(a)
Ratio of net investment income to
average net assets 0.21% 1.(a)
Portfolio turnover rate 63.10% 0.(a)
<FN>
(a) Annualized
(b) August 6, 1997 (commencement of operations) to October 31, 1997
</FN>
</TABLE>
<PAGE>
FLORIDA STREET FUNDS
Notes to Financial Statements
October 31, 1998
NOTE 1. ORGANIZATION
Florida Street Bond Fund (the "Bond Fund") and Florida Street Growth Fund (the
"Growth Fund") are series of the AmeriPrime Funds, an Ohio business trust (the
"Trust"). The Trust is registered under the Investment Company Act of 1940, as
amended, as a diversified series, open-end management investment company. The
investment objective of the each Fund is to provide total return over the long
term. The Trust Agreement permits the Trustees to issue an unlimited number of
shares of beneficial interest of separate series without par value.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuations- Securities which are traded on any exchange or on the
NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking
a last sale price, a security is valued at its last bid price except when, in
the Advisor's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, and the Advisor determines the last
bid price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, in conformity with guidelines adopted by and subject to
review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations, but may
be valued on the basis of prices furnished by a pricing service when the Advisor
believes such prices accurately reflect the fair market value of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith by the Advisor,
subject to review of the Board of Trustees. Short-term investments in fixed
income securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
Federal Income Taxes- Each Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, each Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.
FLORIDA STREET FUNDS
Notes to Financial Statements
October 31, 1998
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued
Dividends and Distributions- Each Fund intends to distribute substantially all
of its net investment income as dividends to its shareholders on an annual
basis. Each Fund intends to distribute its net long-term capital gains and its
net short-term capital gains at least once a year.
Other- 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.
NOTE 3. OPERATING POLICIES
Restricted Securities- The funds are permitted to invest in securities that are
subject to legal or contractual restrictions on resale. These securities
generally may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult. Information regarding restricted securities
is included at the end of each applicable fund's schedule of investments.
NOTE 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Funds retain Commonwealth Advisors, Inc. (the "Advisor") to manage the
Fund's investments. Walter A. Morales, the Advisor's president and chief
investment manager, is responsible for the day to day management of the Bond
Fund; Richard L. Chauvin, Senior Vice-President of the Advisor, is responsible
for the day to day management of the Growth Fund.
Under the terms of the management agreement (the "Agreement"), the Advisor
manages each Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of each Fund except brokerage commissions, taxes,
interest, fees and expenses of non-interested person trustees, and extraordinary
expenses. As compensation for its management services and agreement to pay each
Fund's expenses, the Funds are obligated to pay the Advisor a fee computed and
accrued daily and paid monthly at an annual rate of 0.75% and 1.35% of the
average daily net assets of the Bond Fund and the Growth Fund, respectively.
During the year ended October 31, 1998, the Advisor voluntarily waived a portion
of its advisory fee in order to reduce total operating expenses of each Fund. It
should be noted that most investment companies pay their own operating expenses
directly, while the Funds' expenses, except those specified above, are paid by
Notes to Financial Statements
FLORIDA STREET FUNDS
October 31, 1998
NOTE 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued
the Advisor. For the year ended October 31, 1998, the Advisor received fees of
$103,008 and $34,640 from the Bond Fund and the Growth Fund, respectively.
Each Fund retains AmeriPrime Financial Services, Inc. (the "Administrator") to
manage each Fund's business affairs and to provide each Fund with administrative
services, including all regulatory reporting and necessary office equipment and
personnel. For the year ended October 31, 1998, the Administrator received fees
of $25,000 from the Advisor for administrative services provided to each Fund.
Each Fund retains AmeriPrime Financial Securities, Inc. (the "Distributor") to
act as the principal distributor of each Fund's shares. There were no payments
made to the Distributor for the year ended October 31, 1998. Certain members of
management of the Administrator and the Distributor are also members of
management of the AmeriPrime Trust.
NOTE 5. CAPITAL SHARE TRANSACTIONS
Florida Street Bond Fund. As of October 31, 1998, there was an unlimited number
of no par value shares of capital stock authorized for the Fund. Paid in capital
at October 31, 1998 was $21,521,307. Transactions in capital stock were as
follows:
<TABLE>
<S> <C> <C>
- --------------------------------- -------------------------------------- ----------------------------------------
For the Year Ended For the period August 4, 1997
October 31, (Commencement of Operations) through
October 31,
- --------------------------------- -------------------------------------- ----------------------------------------
1998 1998 1997 1997
- --------------------------------- ------------------ ------------------- ---------------- -----------------------
Shares Dollars Shares Dollars
Shares sold 1,379,576 $13,541,571 744,446 $7,463,588
Shares issued in reinvestment
of dividends 118,681 1,166,552 - -
Shares redeemed (55,224) (533,511) (11,722) (116,893)
-------- ---- --------- ---- -------- ---- ---------
1,443,033 $14,174,612 732,724 $7,346,695
- --------------------------------- ------------------ ------------------- ---------------- -----------------------
</TABLE>
FLORIDA STREET FUNDS
Notes to Financial Statements
October 31, 1998
NOTE 5. CAPITAL SHARE TRANSACTIONS - continued
Florida Street Growth Fund. As of October 31, 1998, there was an unlimited
number of no par value shares of capital stock authorized for the Fund. Paid in
capital at October 31, 1998 was $3,731,077. Transactions in capital stock were
as follows:
<TABLE>
<S> <C> <C>
- ------------------------------------ ------------------------------------ ---------------------------------------
For the Year Ended For the period August 4, 1997
October 31, (Commencement of Operations) through
October 31,
1998 1998 1997 1997
Shares Dollars Shares Dollars
Shares sold 175,386 $1,857,985 211,885 $2,127,711
Shares issued in reinvestment of
dividends 867 8,299 - -
Shares redeemed (21,397) (219,626) (4,179) (43,292)
-------- ---- --------- ---- ------- ---- --------
154,856 $1,646,658 207,706 $2,084,419
- ------------------------------------ ----------------- ------------------ --------------- -----------------------
</TABLE>
NOTE 6. INVESTMENTS
Florida Street Bond Fund. For the year ended to October 31, 1998, purchases and
sales of investment securities, other than short-term investments, aggregated
$1,547,517 and $1,102,364, respectively. The gross unrealized appreciation for
all securities totaled $1,019,672 and the gross unrealized depreciation for all
securities totaled $2,571,184 for a net unrealized depreciation of $1,551,512.
The aggregate cost of securities for federal income tax purposes at October 31,
1998 was $21,559,748.
Florida Street Growth Fund. For the year ended October 31, 1998, purchases and
sales of investment securities, other than short-term investments, aggregated
$3,401,160 and $1,513,378, respectively. The gross unrealized appreciation for
all securities totaled $320,331 and the gross unrealized depreciation for all
securities totaled $434,028 for a net unrealized depreciation of $113,697. The
aggregate cost of securities for federal income tax purposes at October 31, 1998
was $3,432,577.
NOTE 7. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
FLORIDA STREET FUNDS
Notes to Financial Statements
October 31, 1998
NOTE 8. YEAR 2000 Issue
Like other mutual funds, financial and business organizations and individuals
around the world, each Fund could be adversely affected if the computer systems
used by the Advisor, Administrator or Servicers do not properly process and
calculate date-related information and data from and after January 1, 2000. This
is commonly known as the "Year 2000 Issue." The Advisor and Administrator have
taken steps that they believe are reasonably designed to address the Year 2000
Issue with respect to computer systems that are used and to obtain reasonable
assurances that comparable steps are being taken by each of the Fund's major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Funds.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and Board of Trustees
Florida Street Bond Fund and Florida Street Growth Fund
We have audited the statement of assets and liabilities including the portfolio
of investments, of the Florida Street Bond Fund and Florida Street Growth Fund
(members of the Ameriprime Fund Series) as of October 31, 1998, and the related
statement of operations, the statement of changes in net assets, and the
financial highlights for each of the periods indicated. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1998, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting prin-
ciples used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Florida Street Bond Fund and Florida Street Growth Fund as of October 31, 1998,
the results of its operations, the changes in its net assets, and the financial
highlights for each of the periods indicated in conformity with generally
accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
November 9, 1998
<PAGE>
Board of Trustees
The Ameriprime Funds
In planning and performing our audit of the financial statements of
The Ameriprime Funds for the year ended October 31, 1998, we
considered its internal control structure, including procedures for
safeguarding securities, in order to determine our auditing
procedures for the purpose of expressing our opinion on the
financial statements and to comply with the requirements of Form
N-SAR, not to provide assurance on the internal control structure.
The management of The Ameriprime Funds is responsible for estab-
lishing and maintaining an internal control structure. In ful-
filling this responsibility, estimates and judgments by management
are required to assess the expected benefits and related costs of
internal control structure policies and procedures. Two of the
objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets
are safeguarded against loss from unauthorized use or disposition
and transactions are executed in accordance with management's
authorization and recorded properly to permit preparation of
financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure,
errors or irregularities may occur and may not be detected. Also,
projection of any evaluation of the structure to future periods is
subject to the risk that it may become inadequate because of
changes in conditions or that the effectiveness of the design and
operation may deteriorate.
Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control structure
that might be material weaknesses under standards established by
the American Institute of Certified Public Accountants. A material
weakness is a condition in which the design or operation of the
specific internal control structure elements does not reduce to a
relatively low level the risk that errors or irregularities in
amounts that would be material in relation to the financial
statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their
assigned functions. However, we noted no matters involving the
internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined
above as of October 31, 1998.
Board of Trustees
The Ameriprime Funds Page 2
This report is intended solely for the information and use of
management and the Securities and Exchange Commission.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
November 9, 1998
