IMS CAPITAL VALUE FUND
STATEMENT OF ADDITIONAL INFORMATION
June 30, 2000
This Statement of Additional Information ("SAI") is not a prospectus. It
should be read in conjunction with the Prospectus of IMS Capital Value Fund
dated February 28, 2000 and the Supplement to Prospectus dated June 30, 2000.
This SAI incorporates by reference the Fund's Annual Report to Shareholders for
the fiscal year ended June 30, 1999 ("Annual Report"). A free copy of the
Prospectus or Annual Report can be obtained by writing the Transfer Agent at
American Data Services, Inc., 150 Motor Parkway, Hauppauge, New York, 11788, or
by calling (800) 934-5550.
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST AND FUND............................................2
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS...............................................................3
INVESTMENT LIMITATIONS.......................................................5
THE INVESTMENT ADVISOR.......................................................7
TRUSTEES AND OFFICERS........................................................8
PORTFOLIO TRANSACTIONS AND BROKERAGE.........................................9
DETERMINATION OF SHARE PRICE................................................10
INVESTMENT PERFORMANCE......................................................10
CUSTODIAN...................................................................11
TRANSFER AGENT..............................................................11
ACCOUNTANTS.................................................................12
DISTRIBUTOR.................................................................12
ADMINISTRATOR...............................................................12
FINANCIAL STATEMENTS........................................................12
<PAGE>
DESCRIPTION OF THE TRUST AND FUND
IMS Capital Value Fund (the "Fund") was organized as a diversified series
of AmeriPrime Funds (the "Trust") on July 25, 1996 and commenced operations on
August 5, 1996. The Trust is an open-end investment company established under
the laws of Ohio by an Agreement and Declaration of Trust dated August 8, 1995
(the "Trust Agreement"). The Trust Agreement permits the Trustees to issue an
unlimited number of shares of beneficial interest of separate series without par
value. The Fund is one of a series of funds currently authorized by the
Trustees.
The Fund does not issue share certificates. All shares are held in
non-certificate form registered on the books of the Fund and the Transfer Agent
for the account of the shareholder. Each share of a series represents an equal
proportionate interest in the assets and liabilities belonging to that series
with each other share of that series and is entitled to such dividends and
distributions out of income belonging to the series as are declared by the
Trustees. The shares do not have cumulative voting rights or any preemptive or
conversion rights, and the Trustees have the authority from time to time to
divide or combine the shares of any series into a greater or lesser number of
shares of that series so long as the proportionate beneficial interest in the
assets belonging to that series and the rights of shares of any other series are
in no way affected. In case of any liquidation of a series, the holders of
shares of the series being liquidated will be entitled to receive as a class a
distribution out of the assets, net of the liabilities, belonging to that
series. Expenses attributable to any series are borne by that series. Any
general expenses of the Trust not readily identifiable as belonging to a
particular series are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable. No shareholder
is liable to further calls or to assessment by the Trust without his or her
express consent.
Any Trustee of the Trust may be removed by vote of the shareholders
holding not less than two-thirds of the outstanding shares of the Trust. The
Trust does not hold an annual meeting of shareholders. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each whole share he owns and fractional votes for fractional shares he owns.
All shares of the Fund have equal voting rights and liquidation rights. The
Declaration of Trust can be amended by the Trustees, except that any amendment
that adversely effects the rights of shareholders must be approved by the
shareholders affected. Each share of the Fund is subject to redemption at any
time if the Board of Trustees determines in its sole discretion that failure to
so redeem may have materially adverse consequences to all or any of the Fund's
shareholders.
As of October 1, 1999, the following persons may be deemed to beneficially
own five percent (5%) or more of the Fund: Charles Schwab & Co. ("Schwab"), 101
Montgomery Street, San Francisco, CA was the record owner of 66.22% of the Fund.
As a result, Schwab may be deemed to control the Fund. The Schwab accounts are
omnibus accounts, and the Fund is unaware of any individual investor owning 5%
or more of the Fund.
As of October 1, 1999, the officers and trustees as a group own less than
1% of the Fund.
Upon sixty days prior written notice to shareholders, the Fund may make
redemption payments in whole or in part in securities or other property if the
Trustees determine that existing conditions make cash payments undesirable. For
other information concerning the purchase and redemption of shares of the Fund,
see "How to Buy Shares" and "How to Redeem Shares" in the Fund's Prospectus. For
a description of the methods used to determine the share price and value of the
Fund's assets, see "Price of Shares" in the Fund's Prospectus.
<PAGE>
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use.
A. Equity Securities. Equity securities include common stock, American
Depository Receipts (ADRs), preferred stock and common stock equivalents (such
as convertible preferred stock, rights and warrants). Convertible preferred
stock is preferred stock that can be converted into common stock pursuant to its
terms. Warrants are options to purchase equity securities at a specified price
valid for a specific time period. Rights are similar to warrants, but normally
have a short duration and are distributed by the issuer to its shareholders. The
Fund may invest up to 5% of its net assets at the time of purchase in
convertible preferred stock, convertible debentures, rights or warrants. The
Fund reserves the right to invest in foreign stocks, through the purchase of
American Depository Receipts, provided the companies have substantial operations
in the U.S. and do not exceed 5% of the Fund's net assets.
B. American Depository Receipts. American Depository Receipts are
dollar-denominated receipts that are generally issued in registered form by
domestic banks, and represent the deposit with the bank of a security of a
foreign issuer. To the extent that the Fund invests in foreign securities, such
investments may be subject to special risks. For example, there may be less
information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
C. Covered Call Options. The Fund may write (sell) covered call options on
common stocks in the Fund's portfolio. A covered call option on a security is an
agreement to sell a particular portfolio security if the option is exercised at
a specified price, or before a set date. The Fund profits from the sale of the
option, but gives up the opportunity to profit from any increase in the price of
the stock above the option price, and may incur a loss if the stock price falls.
Risks associated with writing covered call options include the possible
inability to effect closing transactions at favorable prices and an appreciation
limit on the securities set aside for settlement. When the Fund writes a covered
call option, it will receive a premium, but it will give up the opportunity to
profit from a price increase in the underlying security above the exercise price
as long as its obligation as a writer continues, and it will retain the risk of
loss should the price of the security decline. The Fund will only engage in
exchange-traded options transactions.
D. Loans of Portfolio Securities. The Fund may made short and long term
loans of its portfolio securities. Under the lending policy authorized by the
Board of Trustees and implemented by the Advisor in response to requests of
broker-dealers or institutional investors which the Advisor deems qualified, the
borrower must agree to maintain collateral, in the form of cash or U.S.
government obligations, with the Fund on a daily mark-to-market basis in an
amount at least equal to 100% of the value of the loaned securities. The Fund
will continue to receive dividends or interest on the loaned securities and may
terminate such loans at any time or reacquire such securities in time to vote on
any matter which the Board of Trustees determines to be serious. With respect to
loans of securities, there is the risk that the borrower may fail to return the
loaned securities or that the borrower may not be able to provide additional
collateral.
E. Purchases of Options. Up to 5% of the Fund's net assets may be invested
in purchases of put and call options involving individual securities and market
indices. An option involves either (a) the right or the obligation to buy or
sell a specific instrument at a specific price until the expiration date of the
option, or (b) the right to receive payments or the obligation to make payments
representing the difference between the closing price of a market index and the
exercise price of the option expressed in dollars times a specified multiple
until the expiration date of the option. Options are sold (written) on
securities and market indices. The purchaser of an option on a security pays the
seller (the writer) a premium for the right granted but is not obligated to buy
or sell the underlying security. The purchaser of an option on a market index
pays the seller a premium for the right granted, and in return the seller of
such an option is obligated to make the payment. Options are traded on organized
exchanges and in the over-the-counter market.
The purchase of options involves certain risks. The purchase of options
limits the Fund's potential loss to the amount of the premium paid and can
afford the Fund the opportunity to profit from favorable movements in the price
of an underlying security to a greater extent than if transactions were effected
in the security directly. However, the purchase of an option could result in the
Fund losing a greater percentage of its investment than if the transaction were
effected directly.
F. Repurchase Agreements. The Fund may invest in repurchase agreements
fully collateralized by U.S. Government obligations. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of an obligation issued by the U.S. Government or by an agency of the U.S.
Government ("U.S. Government Obligations") (which may be of any maturity) and
the seller agrees to repurchase the obligation at a future time at a set price,
thereby determining the yield during the purchaser's holding period (usually not
more than seven days from the date of purchase). Any repurchase transaction in
which the Fund engages will require full collateralization of the seller's
obligation during the entire term of the repurchase agreement. In the event of a
bankruptcy or other default of the seller, the Fund could experience both delays
in liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with Firstar Bank, N.A. (the
Fund's Custodian), other banks with assets of $1 billion or more and registered
securities dealers determined by the Advisor to be creditworthy. The Advisor
monitors the creditworthiness of the banks and securities dealers with which the
Fund engages in repurchase transactions.
G. Fixed Income Securities. Although the Fund intends to invest primarily
in U.S. common stocks, the Advisor reserves the right, during periods of
unusually high interest rates or unusual market conditions, to invest in fixed
income securities for preservation of capital, total return and capital gain
purposes, if the Advisor believes that such a position would best serve the
Fund's investment objective. Fixed income securities include corporate debt
securities, U.S. government securities and participation interests in such
securities. Fixed income securities are generally considered to be interest rate
sensitive, which means that their value will generally decrease when interest
rates rise and increase when interest rates fall. Securities with shorter
maturities, while offering lower yields, generally provide greater price
stability than longer term securities and are less affected by changes in
interest rates.
CORPORATE DEBT SECURITIES - Corporate debt securities are long and short
term debt obligations issued by companies (such as publicly issued and privately
placed bonds, notes and commercial paper). The Advisor considers corporate debt
securities to be of investment grade quality if they are rated A or higher by
Standard & Poor's Corporation, or Moody's Investors Services, Inc., or if
unrated, determined by the Advisor to be of comparable quality. Investment grade
debt securities generally have adequate to strong protection of principal and
interest payments. In the lower end of this category, credit quality may be more
susceptible to potential future changes in circumstances and the securities have
speculative elements. The Fund will not invest more than 5% of the value of its
net assets in securities that are below investment grade.
U.S. GOVERNMENT OBLIGATIONS - U.S. government obligations may be backed by
the credit of the government as a whole or only by the issuing agency. U.S.
Treasury bonds, notes, and bills and some agency securities, such as those
issued by the Federal Housing Administration and the Government National
Mortgage Association (GNMA), are backed by the full faith and credit of the U.S.
government as to payment of principal and interest and are the highest quality
government securities. Other securities issued by U.S. government agencies or
instrumentalities, such as securities issued by the Federal Home Loan Banks and
the Federal Home Loan Mortgage Corporation, are supported only by the credit of
the agency that issued them, and not by the U.S. government. Securities issued
by the Federal Farm Credit System, the Federal Land Banks, and the Federal
National Mortgage Association (FNMA) are supported by the agency's right to
borrow money from the U.S. Treasury under certain circumstances, but are not
backed by the full faith and credit of the U.S. government.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been adopted
by the Trust with respect to the Fund and are fundamental ("Fundamental"), i.e.,
they may not be changed without the affirmative vote of a majority of the
outstanding shares of the Fund. As used in the Prospectus and the Statement of
Additional Information, the term "majority" of the outstanding shares of the
Fund means the lesser of (1) 67% or more of the outstanding shares of the Fund
present at a meeting, if the holders of more than 50% of the outstanding shares
of the Fund are present or represented at such meeting; or (2) more than 50% of
the outstanding shares of the Fund. Other investment practices which may be
changed by the Board of Trustees without the approval of shareholders to the
extent permitted by applicable law, regulation or regulatory policy are
considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, which will not be considered as borrowings
provided they are fully collateralized.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is (a) consistent with or permitted by the
Investment Company Act of 1940, as amended, the rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and the Statement
of Additional Information.
3. Underwriting. The Fund will not act as underwriter of securities
------------
issued by other persons. This limitation is not applicable to the extent
that, in connection with the disposition of portfolio securities (including
restricted securities), the Fund may be deemed an underwriter under certain
federal securities laws.
4. Real Estate. The Fund will not purchase or sell real estate.
-----------
This limitation is not applicable to investments in marketable securities
which have a significant portion of their assets in real estate.
5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing non-publicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total
-------------
assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment company,
whether organized as a trust, association or corporation, or a personal holding
company, may be merged or consolidated with or acquired by the Trust, provided
that if such merger, consolidation or acquisition results in an investment in
the securities of any issuer prohibited by said paragraphs, the Trust shall,
within ninety days after the consummation of such merger, consolidation or
acquisition, dispose of all of the securities of such issuer so acquired or such
portion thereof as shall bring the total investment therein within the
limitations imposed by said paragraphs above as of the date of consummation.
Non-Fundamental. The following limitations have been adopted by the Trust
with respect to the Fund and are Non-Fundamental (see "Investment Restrictions"
above).
i. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
ii. Borrowing. The Fund will not purchase any security while
---------
borrowings representing more than 5% of its total assets are outstanding.
The Fund will not invest in reverse repurchase agreements.
iii. Margin Purchases. The Fund will not purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by the Fund for the clearance of purchases and sales or
redemption of securities, or to arrangements with respect to transactions
involving options and other permitted investments and techniques.
iv. Short Sales. The Fund will not effect short sales.
-----------
v. Options. The Fund will not purchase or sell puts, calls, options
-------
or straddles, except as described in the Prospectus and the Statement of
Additional Information.
vi. Repurchase Agreements. The Fund may invest some or all of the
---------------------
funds assets in U.S. Government repurchase agreements temporarily under
certain conditions described in the prospectus.
vii. Illiquid Investments. The Fund will not invest in securities for
--------------------
which there are legal or contractual restrictions on resale and other
illiquid securities.
viii. Mortgage-related Securities. The Fund will not invest in
-----------------------------
mortgage-related securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is IMS Capital Management, 10159 S.E.
Sunnyside Road, Suite 330, Portland, Oregon 97015. Carl W. Marker may be deemed
to be a controlling person of the Advisor due to his ownership of the shares of
the corporation.
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
1.59% of the average daily net assets of the Fund. The Advisor may waive all or
part of its fee, at any time, and at its sole discretion, but such action shall
not obligate the Advisor to waive any fees in the future. For the period August
5, 1996 (commencement of operations) through October 31, 1996 and for the fiscal
years ended October 31, 1997 and 1998, the Fund paid advisory fees of $9,952,
$108,433 and $164,074, respectively. For the period November 1, 1998
(commencement of the Fund's new fiscal year) through June 30, 1999, the Fund
paid advisory fees of $98,550.
The Advisor retains the right to use the name "IMS" in connection with
another investment company or business enterprise with which the Advisor is or
may become associated. The Trust's right to use the name "IMS" automatically
ceases ninety days after termination of the Agreement and may be withdrawn by
the Advisor on ninety days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
<PAGE>
TRUSTEES AND OFFICERS
The Board of Trustees supervises the business activities of the Trust. The
names of the Trustees and executive officers of the Trust are shown below. Each
Trustee who is an "interested person" of the Trust, as defined in the Investment
Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
Name, Age and Address Position Principal Occupation During Past 5 Years
-----------------------------------------------------------------------------------------
<S> <C> <C>
Kenneth D. Trumpfheller President, President, Treasurer , and Secretary of AmeriPrime
1793 Kingswood Drive Secretary, Financial Services, Inc., the Fund's administrator, and
Suite 200 Treasurer, AmeriPrime Financial Securities, Inc., the Fund's
Southlake, TX 76092 and Trustee distributor, since 1994; President, Secretary, Treasurer and
Trustee of AmeriPrime Funds and AmeriPrime Insurance
Trust; prior to December, 1994 a senior client executive
Year of Birth: 1958 with SEI Financial Services.
-----------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C.,
2001 N. Indianwood Avenue oil and gas services company; various positions with
Broken Arrow, OK 74012 Carbo Ceramics, Inc., oil field manufacturing/ supply
company, from 1984 to 1997, most recently Vice President
Year of Birth: 1957 of Marketing
-----------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer
600 Jefferson Street of Legacy Trust Company since 1992; President
Suite 350 and Director of Heritage Trust Company from 1994-1996;
Houston, TX 77002 Vice President and Manager of Investments of Kanaly Trust
Company from 1988 to 1992.
Year of Birth: 1947
-----------------------------------------------------------------------------------------
</TABLE>
THE COMPENSATION PAID TO THE TRUSTEES OF THE TRUST FOR THE FUND'S FISCAL
YEAR ENDED JUNE 30, 1999 IS SET FORTH IN THE FOLLOWING TABLE. TRUSTEE FEES ARE
TRUST EXPENSES AND EACH SERIES OF THE TRUST PAYS A PORTION OF THE TRUSTEE FEES.
<PAGE>
============================ ======================= ===========================
NAME AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM TRUST (THE TRUST IS
FROM TRUST NOT IN A FUND COMPLEX)
---------------------------- ----------------------- ---------------------------
Kenneth D. Trumpfheller 0 0
---------------------------- ----------------------- ---------------------------
Steve L. Cobb $11,029 $11,029
---------------------------- ----------------------- ---------------------------
Gary E. Hippenstiel $11,029 $11,029
============================ ======================= ===========================
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust, the
Advisor is responsible for the Fund's portfolio decisions and the placing of the
Fund's portfolio transactions. In placing portfolio transactions, the Advisor
seeks the best qualitative execution for the Fund, taking into account such
factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received. Consistent with
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc., and subject to its obligation of seeking best qualitative execution, the
Advisor may give consideration to sales of shares of the Trust as a factor in
the selection of brokers and dealers to execute portfolio transactions.
The Advisor is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Advisor's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and economic
analyses, statistical services and information with respect to the availability
of securities or purchasers or sellers of securities and analyses of reports
concerning performance of accounts. The research services and other information
furnished by brokers through whom the Fund effects securities transactions may
also be used by the Advisor in servicing all of its accounts. Similarly,
research and information provided by brokers or dealers serving other clients
may be useful to the Advisor in connection with its services to the Fund.
Although research services and other information are useful to the Fund and the
Advisor, it is not possible to place a dollar value on the research and other
information received. It is the opinion of the Board of Trustees and the Advisor
that the review and study of the research and other information will not reduce
the overall cost to the Advisor of performing its duties to the Fund under the
Agreement. Due to research services provided by brokers, the Fund directed to
brokers $4,421,901 and $12,288,660 of brokerage transactions (on which
commissions were $11,328 and $29,459) during the fiscal years ended October 31,
1997 and 1998. For the period November 1, 1998 (commencement of the Fund's new
fiscal year) through June 30, 1999, the Fund directed to brokers $11,274,145 of
brokerage transactions (on which commissions were $28,330) due to research
services provided by brokers.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
To the extent that the Trust and another of the Advisor's clients seek to
acquire the same security at about the same time, the Trust may not be able to
acquire as large a position in such security as it desires or it may have to pay
a higher price for the security. Similarly, the Trust may not be able to obtain
as large an execution of an order to sell or as high a price for any particular
portfolio security if the other client desires to sell the same portfolio
security at the same time. On the other hand, if the same securities are bought
or sold at the same time by more than one client, the resulting participation in
volume transactions could produce better executions for the Trust. In the event
that more than one client wants to purchase or sell the same security on a given
date, the purchases and sales will normally be made by random client selection.
For the period August 5, 1996 (commencement of operations) through October
31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the Fund paid
brokerage commissions of $3,318, $22,002 and $46,635, respectively. For the
period November 1, 1998 (commencement of the Fund's new fiscal year) through
June 30, 1999, the Fund paid brokerage commissions of $33,268.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as of
4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "The Price of Shares"
in the Prospectus.
INVESTMENT PERFORMANCE
Each Fund may periodically advertise "average annual total return."
"Average annual total return," as defined by the Securities and Exchange
Commission, is computed by finding the average annual compounded rates of return
for the period indicated that would equate the initial amount invested to the
ending redeemable value, according to the following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the applicable
period of the hypothetical $1,000 investment made at
the beginning of the applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue. For the period August 5,
1996 (commencement of operations) to October 31, 1996 and for the fiscal years
ended October 31, 1997 and 1998, the Fund's average annual total return was
30.23%, annualized, 12.08% and 2.27% respectively. For the period November 1,
1998 (commencement of the Fund's new fiscal year) through June 30, 1999, the
Fund's total return was 29.08%.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other groups
of mutual funds tracked by any widely used independent research firm which ranks
mutual funds by overall performance, investment objectives and assets, such as
Lipper Analytical Services, Inc. or Morningstar, Inc. The objectives, policies,
limitations and expenses of other mutual funds in a group may not be the same as
those of the Fund. Performance rankings and ratings reported periodically in
national financial publications such as Barron's and Fortune also may be used.
CUSTODIAN
Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Fund's investments. The Custodian acts as the Fund's
depository, safekeeping its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
TRANSFER AGENT
As of July 1, 2000, Unified Fund Services, Inc., 431 N. Pennsylvania St.,
Indianapolis, IN 46204 ("Unified"), acts as the Fund's transfer agent and, in
such capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other shareholder service functions. For its services as
transfer agent, Unified receives a monthly fee from the Advisor of $1.20 per
shareholder (subject to a minimum monthly fee of $750). In addition, Unified
provides the Fund with fund accounting services, which includes certain monthly
reports, record-keeping and other management-related services. For its services
as fund accountant, Unified receives an annual fee from the Advisor equal to
0.0275% of the Fund's assets up to $100 million, and 0.0250% of the Fund's
assets from $100 million to $300 million, and 0.0200% of the Fund's assets over
$300 million (subject to various monthly minimum fees, the maximum being $2,000
per month for assets of $20 to $100 million). Prior to July 1, 2000, American
Data Services, Inc. ("ADS"), Hauppauge Corporate Center, 150 Motor Parkway,
Hauppauge, New York 11788, acted as the Fund's transfer agent. For the period
August 5, 1996 (commencement of operations) through October 31, 1996 and for the
fiscal years ended October 31, 1997 and 1998, ADS received $4,800, $20,000 and
$16,878, respectively, from the Fund for these services. For the period November
1, 1998 (commencement of the Fund's new fiscal year) through June 30, 1999, ADS
received $18,128 from the Fund for these services.
<PAGE>
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Fund for
the fiscal year ending June 30, 2000. McCurdy & Associates performs an annual
audit of the Fund's financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Fund. Kenneth D. Trumpfheller, a Trustee and officer of the Trust, is an
affiliate of the Distributor. The Distributor is obligated to sell the shares of
the Fund on a best efforts basis only against purchase orders for the shares.
Shares of the Fund are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. For the period August 5, 1996 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Administrator received $12,500, $30,000, and $30,000, respectively from the Fund
for these services. For the period November 1, 1998 (commencement of the Fund's
new fiscal year) through June 30, 1999, the Administrator received $20,000 from
the Fund for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditors' report required to be
included in the Statement of Additional Information are incorporated herein by
reference to the Fund's Annual Report to Shareholders for the period ended June
30, 1999. The Trust will provide the Annual Report without charge by calling the
Fund at (800)-934-5550.
