A R I S T O N
------------------------------------------------------------------------------
Ariston Capital Management Corporation
40 Lake Bellevue Drive Suite 220
Bellevue, Washington 98005
Telephone (425) 454-1600
Fax (425) 455-2534
Dear Fellow Shareholder:
We are pleased to present to you our Fund's semiannual report for mid-year 2000.
Listed below are some comparative total return performance measurements for the
periods ended June 30, 2000:
6 Months 1 Year
-------- ------
Ariston Convertible Securities Fund -2.60% +62.63%
Lipper Convertible Fund Average +6.30% +25.73%
Standard & Poor's 500 Stock Index (unmanaged) -0.42% +7.24%
Russell 2000 Stock Index (unmanaged) +3.03% +14.32%
Lehman Gov./Corp. Bond Index (unmanaged) +4.16% +4.28%
Sources: Lipper Analytical Services, Inc. and Wiesenberger, a Thompson Financial
Company
Comparison of change in value of a $10,000 investment in the Ariston Convertible
Securities Fund, the unmanaged Russell 2000 Stock Index and the unmanaged
Lehman Brothers Government/Corporate Bond Index
Ariston Convertible Lehman Brothers Russell 2000
Securities Fund Govt/Corp Bond Index Stock Index
------------------- -------------------- ------------
1989 First Quarter
Second Quarter
Third Quarter
Fourth Quarter $10,000 $10,000 $10,000
1990 First Quarter $10,083 $ 9,886 $ 9,779
Second Quarter $10,656 $10,241 $10,155
Third Quarter $ 9,192 $10,302 $ 7,663
Fourth Quarter $ 9,662 $10,827 $ 8,049
1991 First Quarter $11,500 $11,118 $10,443
Second Quarter $11,866 $11,285 $10,281
Third Quarter $12,785 $11,932 $11,120
Fourth Quarter $14,015 $12,568 $11,756
1992 First Quarter $13,821 $12,380 $12,638
Second Quarter $13,119 $12,881 $11,776
Third Quarter $14,065 $13,511 $12,113
Fourth Quarter $15,812 $13,521 $13,922
1993 First Quarter $16,351 $14,151 $14,515
Second Quarter $15,272 $14,577 $14,831
Third Quarter $16,387 $15,061 $16,128
Fourth Quarter $16,846 $15,017 $16,552
1994 First Quarter $16,236 $14,544 $16,111
Second Quarter $15,926 $14,364 $15,483
Third Quarter $16,604 $14,435 $16,558
Fourth Quarter $17,066 $14,489 $16,250
1995 First Quarter $17,656 $15,210 $16,999
Second Quarter $17,946 $16,198 $18,592
Third Quarter $19,365 $16,507 $20,428
Fourth Quarter $20,245 $17,276 $20,872
1996 First Quarter $21,342 $16,872 $21,936
Second Quarter $20,821 $16,951 $23,033
Third Quarter $21,846 $17,250 $23,111
Fourth Quarter $21,234 $17,777 $24,313
1997 First Quarter $20,176 $17,624 $23,056
Second Quarter $22,245 $18,266 $26,793
Third Quarter $24,146 $18,905 $30,780
Fourth Quarter $24,028 $19,512 $29,749
1998 First Quarter $26,051 $19,809 $32,739
Second Quarter $25,319 $20,328 $31,210
Third Quarter $21,258 $21,334 $24,924
Fourth Quarter $24,532 $21,364 $28,990
1999 First Quarter $24,691 $21,107 $27,415
Second Quarter $28,987 $20,877 $31,678
Third Quarter $28,509 $20,986 $29,676
Fourth Quarter $47,741 $20,900 $35,057
2000 First Quarter $52,363 $21,458 $37,538
Second Quarter $46,498 $21,769 $36,119
[OBJECT OMITTED]
THIS GRAPH, PREPARED IN ACCORDANCE WITH SEC REGULATIONS, COMPARES A $10,000
INVESTMENT IN THE FUND WITH A SIMILAR INVESTMENT IN THE UNMANAGED RUSSELL 2000
STOCK INDEX AND THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX. RESULTS FOR
THE FUND, THE RUSSELL 2000 STOCK INDEX AND LEHMAN BROTHERS GOVERNMENT/CORPORATE
BOND INDEX INCLUDE THE REINVESTMENT OF DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS.
INVESTMENT RETURNS AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN AT THEIR
ORIGINAL COST. TOTAL RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS.
AVERAGE ANNUAL STANDARD
TOTAL RETURNS FOR THE
YEAR ENDED 6/30/00
-------------------------------------------------------------------------
FUND/INDEX 1 YEAR 5 YEAR 10 YEAR
-------------------------------------------------------------------------
ARISTON CONVERTIBLE
SECURITIES FUND 60.41% 20.97% 15.87%
-------------------------------------------------------------------------
LEHMAN GOV/CORP
BOND INDEX 4.28% 6.09% 7.83%
-------------------------------------------------------------------------
RUSSELL 2000
STOCK INDEX 14.32% 14.20% 13.53%
-------------------------------------------------------------------------
60.41%, 20.97% AND 15.87% ARE THE ONE, FIVE AND TEN YEAR AVERAGE ANNUAL STANDARD
TOTAL RETURNS, RESPECTIVELY, FOR THE SIX MONTHS ENDED JUNE 30, 2000. INVESTMENT
RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN AT ORIGINAL COST. TOTAL
RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF FUTURE RESULTS.
Our Fund was the top performing convertible securities fund for the one-year
period according to Lipper Analytical Services, Inc.
During the first six months of this year, our Fund has been buffeted by the
larger trends in the financial markets. Growth stocks, in particular, continued
their 1999 bullish run into March and then became gripped in a corrective,
bearish retrenchment process that bottomed out in May. NASDAQ, in particular,
has exhibited gut wrenching volatility. Its percentage sell-off was roughly
equal to the 1987 crash period and was worse than either the 1990 or the 1998
panics. Taking a longer-term perspective of the outsized gains for NASDAQ this
year, this correction can be put into some context. Such outbreaks of panic
selling, while painful in the near-term, actually rejuvenate the bullish
investment cycle in the long-term by purging stock market excesses.
Our view is that the worst has passed, and the markets will be backing and
filling for several more weeks or months. Another bullish advance beginning
before year-end will follow this period.
We continue to seek out and invest in dynamic profitable growth companies in
ascendant industries. These companies all have unique growth franchises that are
difficult, if not impossible, to duplicate and that have substantial barriers to
entry for competitors. Through the use of convertible securities, we can dampen
some of the downside volatility associated with growth stock investing.
We appreciate your continued support and confidence, and we will continue to
work hard for our Fund's investment success.
We always welcome the opportunity to discuss any questions you may have about
your investment.
Sincerely,
Richard B. Russell, President
July 2000
<PAGE>
<TABLE>
<CAPTION>
ARISTON CONVERTIBLE SECURITIES FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000
(UNAUDITED)
<S> <C> <C>
PRINCIPAL
CONVERTIBLE BONDS - 60.6% AMOUNT VALUE
BIOTECHNOLOGY - 8.8%
Genentech, Inc. (Roche Holdings),
0.00%, 1/19/2015 (b)(d) 1,200,000 $ 1,092,000
Genzyme General Corp.,
5.25%, 6/1/2005 595,000 974,312
-----------------
2,066,312
-----------------
COMPUTER SERVICES - ENTERPRISE - 5.1%
Veritas Software Corp.,
1.856%, 8/13/2006 380,000 1,197,475
-----------------
COMPUTER SERVICES / DATA PROCESSING - 2.4%
Automatic Data Processing Services, Inc.,
0.00%, 2/20/2012 (b) 400,000 563,500
-----------------
COMPUTER SOFTWARE/APPLICATIONS - 4.4%
Rational Software Corp.,
5.00%, 2/1/2007 (d) 700,000 1,029,875
-----------------
COMPUTER SOFTWARE/INTERNET - 5.4% BEA Systems, Inc.,
4.00%, 12/15/2006 (d) 800,000 1,268,000
-----------------
COMPUTER SOFTWARE/STORAGE - 3.5% i2 Technologies, Inc.,
5.25%, 12/15/2006 540,000 831,600
-----------------
ELECTRONIC MANUFACTURING SERVICES - 8.0%
Sanmina Corp.,
4.25%, 5/01/2004 550,000 1,100,000
SCI Systems, Inc.,
3.00%, 3/15/2007 800,000 789,000
-----------------
1,889,000
-----------------
PHARMACEUTICALS - 3.9%
Elan (Athena Neurosciences) PLC,
4.75%, 11/15/2004 650,000 914,063
-----------------
SEMICONDUCTORS - 10.6%
Conexant Systems, Inc.,
4.25%, 5/1/2006 310,000 683,550
Intel (Level One Communications) Corp.,
4.00%, 9/1/2004 210,000 906,244
LSI Logic Corp.,
4.00%, 2/15/2005 850,000 904,188
-----------------
2,493,982
-----------------
ARISTON CONVERTIBLE SECURITIES FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000 - CONTINUED
(UNAUDITED)
PRINCIPAL
AMOUNT VALUE
TELECOMMUNICATIONS EQUIPMENT - 4.2%
Alcatel DSC Communications Corp.,
7.00%, 8/1/2004 865,000 $ 990,425
-----------------
WIRELESS NETWORKING - 4.3%
Wind River Systems, Inc.,
5.00%,8/1/2002 775,000 1,005,562
-----------------
TOTAL CONVERTIBLE BONDS
(Cost $11,495,547) 14,249,794
-----------------
CONVERTIBLE PREFERRED STOCKS - 3.8% SHARES VALUE
TELECOMMUNICATIONS SERVICES - 3.8%
Global Crossing Ltd., 6.375% (Cost $1,000,000) 4,000 883,500
-----------------
COMMON STOCKS - 27.3%
BIOTECHNOLOGY - 2.2%
Chiron Corp. (a) 10,703 508,393
-----------------
COMPUTER EQUIPMENT STORAGE - 4.5%
EMC Corp. (a) 13,838 1,050,823
-----------------
RETAIL STORES / BUILDING PRODUCTS - 2.7%
Home Depot, Inc. 13,018 646,832
-----------------
SEMICONDUCTORS - 13.0%
Analog Devices Corp. (a) 40,000 3,047,500
-----------------
TELECOMMUNICATIONS EQUIPMENT/WIRELESS - 4.9%
Qualcomm, Inc. (a) 19,269 1,156,140
-----------------
TOTAL COMMON STOCKS
(Cost $1,800,294) $ 6,409,688
-----------------
ARISTON CONVERTIBLE SECURITIES FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000 - CONTINUED
(UNAUDITED)
PRINCIPAL
AMOUNT VALUE
Money Market Securities - 7.7%
Firstar Treasury Fund, 5.44% (c) (Cost $1,814,782) 1,814,782 $ 1,814,782
-----------------
TOTAL INVESTMENT - 99.4%
(Cost $16,110,623) 23,357,764
-----------------
OTHER ASSETS LESS LIABILITIES - 0.6% 129,682
-----------------
TOTAL NET ASSETS - 100.0% $ 23,487,446
=================
(a) Non-income producing
(b) Zero Coupon Bond
(c) Variable rate security; the coupon rate shown represents the rate at June 30, 2000.
(d) 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 June 30, 2000 the value of
these securities amounted to $3,389,875 or 14.40% of net assets.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
ARISTON CONVERTIBLE SECURITIES FUND JUNE 30, 2000
STATEMENT OF ASSETS & LIABILITIES
(UNAUDITED)
ASSETS
Investment in securities (cost $16,110,623) $ 23,357,764
Dividends receivable 17,539
Interest receivable 110,643
Receivable for fund shares sold 130,050
------------------
TOTAL ASSETS 23,615,996
LIABILITIES
Payable to custodian bank 33,895
Accrued investment advisory fee 45,148
Payable for fund shares redeemed 49,388
Other payables and accrued expenses 119
-----------------
TOTAL LIABILITIES 128,550
------------------
NET ASSETS $ 23,487,446
==================
Net Assets consist of:
Paid in capital 15,949,014
Accumulated net investment loss (193,739)
Accumulated net realized gain on investments 485,030
Net unrealized appreciation on investments 7,247,141
------------------
NET ASSETS, for 964,710 shares $ 23,487,446
==================
NET ASSET VALUE
Net Assets
Offering price and redemption price per share ($23,487,466/ 964,710) $ 24.35
==================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARISTON CONVERTIBLE SECURITIES FUND
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME
Dividend income $ 53,441
Accretion of discount 16,360
Interest income 180,020
Amortization of premium (209,746)
---------------
TOTAL INCOME 40,075
EXPENSES
Investment advisory fee $ 232,046
Trustee Fees 1,768
------------------
Total operating expenses 233,814
---------------
NET INVESTMENT LOSS (193,739)
---------------
REALIZED & UNREALIZED GAIN (LOSS)
Net realized gain on investment securities 617,857
Change in net unrealized appreciation (depreciation)
on investment securities (1,773,506)
------------------
Net loss on investment securities (1,155,649)
---------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(1,349,388)
===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARISTON CONVERTIBLE SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2000 DECEMBER 31,
(UNAUDITED) 1999
------------------ -----------------
Increase (Decrease) in Net Assets
OPERATIONS
Net investment loss $ (193,739) $ (58,599)
Net realized gain on investment securities 617,857 2,712,344
Change in net unrealized appreciation (depreciation) (1,773,506) 5,198,325
------------------ -----------------
Net increase (decrease) in net assets resulting from operations (1,349,388) 7,852,070
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gain (172) (2,573,485)
------------------ -----------------
SHARE TRANSACTIONS
Net proceeds from sale of shares 14,131,053 3,785,062
Shares issued in reinvestment of distributions 172 2,474,563
Shares redeemed (5,254,139) (5,963,596)
------------------ -----------------
NET INCREASE IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS 8,877,086 296,029
------------------ -----------------
TOTAL INCREASE IN NET ASSETS 7,527,526 5,574,614
Net Assets
Beginning of period 15,959,920 10,385,306
------------------ -----------------
End of period [including accumulated undistributed net
investment income (loss) of $(193,739) and $0, respectively] $ 23,487,446 $ 15,959,920
================== =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARISTON CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
JUNE 30, 2000 ---------- --------- --------- -------- --------
UNAUDITED) (A) 1999 (A) 1998 1997 1996 1995
--------------- ---------- --------- --------- -------- --------
Selected Per Share Data
Net asset value, beginning of period $ 25.00 $ 15.36 $ 15.08 $ 13.66 $ 13.66 $ 11.84
---------- ---------- --------- --------- -------- --------
Income from investment operations:
Net investment income (loss) (0.24) (0.11) 0.00 0.11 0.11 0.15
Net realized and unrealized gain (loss)
on investments (0.41) 14.49 0.31 1.68 0.55 2.04
---------- ---------- --------- ---------- -------- ---------
Total from investment operations (0.65) 14.38 0.31 1.79 0.66 2.19
---------- ---------- --------- ---------- -------- ---------
Less distributions:
Distributions from net investment income 0.00 0.00 0.00 (0.11) (0.11) (0.15)
Distributions from net realized gains 0.00 (4.74) (0.03) (0.26) (0.55) (0.22)
---------- ---------- --------- ---------- -------- ---------
Total distributions 0.00 (4.74) (0.03) (0.37) (0.66) (0.37)
---------- ---------- --------- ---------- -------- ---------
Net asset value, end of period $ 24.35 $ 25.00 $ 15.36 $ 15.08 $ 13.66 $ 13.66
========== ========== ========= ========== ======== =========
TOTAL RETURN (2.60)%(b) 94.61% 2.09% 13.16% 4.89% 18.63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000) $23,487 $15,960 $10,385 $10,345 $11,208 $11,641
Ratio of expenses to average net assets 2.25% (c) 2.10% 2.32% 2.38% 2.39% 2.52%
Ratio of net investment income to
average net assets (1.86)%(c) (0.59)% (0.13)% 0.79% 0.77% 1.24%
Portfolio turnover rate 31.41% (c) 32.89% 27.79% 30.47% 18.45% 11.23%
(a) See note 1
(b) For a period of less than a full year, the total return is not annualized.
(c) Annualized
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARISTON INTERNET CONVERTIBLE FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000
(UNAUDITED)
<S> <C> <C>
PRINCIPAL
CONVERTIBLE BONDS - 81.0% AMOUNT VALUE
COMMERCIAL SERVICES - 10.0%
Checkfree Holdings Corp.,
6.50%, 12/01/2006 (c) 30,000 $ 28,950
Getty Images, Inc.,
5.00%, 03/15/2007 (c) 40,000 33,850
---------------
62,800
---------------
COMPUTER SOFTWARE / APPLICATIONS - 5.8%
Rational Software Corp.,
5.00%, 02/01/2007 (c) 25,000 36,781
---------------
COMPUTER SOFTWARE / INTERNET - 8.7%
BEA Systems, Inc.,
4.00%, 12/15/2006 (c) 20,000 31,700
i2 Technologies, Inc.,
5.25%, 12/15/2006 15,000 23,100
---------------
54,800
---------------
COMPUTER SOFTWARE / STORAGE - 5.0%
Veritas Software Corp.,
1.856%, 08/13/2006 10,000 31,513
---------------
ELECTRONIC MANUFACTURING SERVICES - 6.4%
Sanmina Corp.,
4.25%, 05/01/2004 20,000 40,000
---------------
NETWORKING EQUIPMENT / BROADBAND - 11.7%
Juniper Networks, Inc.,
4.75%, 03/15/2007 30,000 33,375
Redback Networks, Inc.,
5.00%, 04/01/2007 (c) 35,000 39,944
---------------
73,319
---------------
SEMICONDUCTORS - 24.7%
Burr Brown Corp.,
4.25%, 02/15/2007 (c) 15,000 25,481
Conexant Systems, Inc.,
4.25%, 05/01/2006 10,000 22,050
Intel Corp. (Level One Communications),
4.00%, 09/01/2004 10,000 43,155
TriQuint Semiconductor, Inc.,
4.00%, 03/01/2007 (c) 35,000 32,112
Vitesse Semiconductor Corp.,
4.00%, 03/15/2005 (c) 35,000 32,725
---------------
155,523
---------------
TELECOMMUNICATIONS EQUIPMENT - 4.6%
Alcatel ADR (DSC Communications Corp.),
7.00%, 08/01/2004 25,000 28,625
---------------
WIRELESS NETWORKING - 4.1%
Wind River Systems, Inc.,
5.00%, 08/01/2002 20,000 25,950
---------------
TOTAL CONVERTIBLE BONDS
(Cost $493,386) 509,311
---------------
ARISTON INTERNET CONVERTIBLE FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 2000 (UNAUDITED) - CONTINUED
CONVERTIBLE PREFERRED STOCKS - 9.0% SHARES VALUE
INTERNET SERVICE PROVIDER - 4.6%
PSINet, Inc., Series C 600 $ 29,100
---------------
TELECOMMUNICATIONS SERVICES - 4.4%
Global Crossing Ltd., 6.75% 125 27,610
---------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $63,575) 56,710
---------------
COMMON STOCKS - 8.6%
COMPUTER EQUIPMENT / STORAGE - 8.6%
EMC Corp. (a) (Cost $50,349) 714 54,220
---------------
PRINCIPAL
AMOUNT VALUE
Money Market Securities - 0.7%
Firstar Treasury Fund, 5.44% (b) (Cost $4,300) 4,300 4,300
---------------
TOTAL INVESTMENTS - 99.3%
(Cost $611,610) 624,541
---------------
OTHER ASSETS LESS LIABILITIES - 0.7% 4,325
---------------
TOTAL NET ASSETS - 100.0% $ 628,866
===============
(a) Non-income producing
(b) Variable rate security; the coupon rate shown represents the rate at June 30, 2000.
(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 June 30, 2000, the value
of these securities amounted to $261,543 or 41.6% of net assets.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
ARISTON INTERNET CONVERTIBLE FUND JUNE 30, 2000
STATEMENT OF ASSETS & LIABILITIES
(UNAUDITED)
ASSETS
Investment in securities (cost $611,610) $ 624,541
Interest receivable 5,632
------------------
TOTAL ASSETS 630,173
LIABILITIES
Accrued investment advisory fee payable 1,049
Accrued 12b-1 fees Premier Shares (see note 3) 46
Other payables and accrued expenses 28
Payable to custodian bank 184
-----------------
TOTAL LIABILITIES 1,307
------------------
NET ASSETS $ 628,866
==================
Net Assets consist of:
Paid in capital 644,859
Accumulated undistributed net investment loss (2,416)
Accumulated undistributed net realized loss on investments (26,508)
Net unrealized appreciation on investments 12,931
------------------
NET ASSETS $ 628,866
==================
NET ASSET VALUE
ELITE SHARES
Net Asset Value and
Offering price and redemption price per share ($533,105 / 56,205 ) $ 9.49
==================
PREMIER SHARES
Net Asset Value and
Redemption price per share ($95,761 / 10,133) $ 9.45
==================
Maximum offering price per share ($9.45 / 0.96) $ 9.84
==================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARISTON INTERNET CONVERTIBLE FUND
STATEMENT OF OPERATIONS FOR THE PERIOD MAY 1, 2000
(COMMENCEMENT OF OPERATIONS) THROUGH JUNE 30, 2000
(UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME
Dividend Income $ 533
Accretion of Discount 363
Amortization of Premium (3,860)
Interest Income 2,423
---------------
TOTAL INCOME (541)
EXPENSES
Investment advisory fee $ 1,829
12b-1 fees Premier Shares (see note 3) 46
------------------
Total operating expenses 1,875
---------------
NET INVESTMENT LOSS (2,416)
---------------
REALIZED & UNREALIZED GAIN (LOSS)
Net realized loss on investment securities (26,508)
Change in net unrealized appreciation (depreciation)
on investment securities 12,931
------------------
Net loss on investment securities (13,577)
---------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (15,993)
===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARISTON INTERNET CONVERTIBLE FUND
STATEMENT OF CHANGES IN NET ASSETS
<S> <C>
PERIOD
ENDED
JUNE 30, 2000
(UNAUDITED) (A)
-----------------
Increase (Decrease) in Net Assets
OPERATIONS
Net investment loss $ (2,416)
Net realized loss on investment securities (26,508)
Change in net unrealized appreciation 12,931
-----------------
Net decrease in net assets resulting from operations (15,993)
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income:
Elite Shares 0
Premier Shares 0
From net realized gain:
Elite Shares 0
Premier Shares 0
-----------------
Total distributions 0
-----------------
SHARE TRANSACTIONS Net proceeds from sale of shares:
Elite Shares 546,293
Premier Shares 98,566
Shares issued in reinvestment of distributions:
Elite Shares 0
Premier Shares 0
Shares redeemed:
Elite Shares 0
Premier Shares 0
-----------------
NET INCREASE IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS 644,859
-----------------
TOTAL INCREASE IN NET ASSETS 628,866
Net Assets
Beginning of period 0
-----------------
End of period [including accumulated undistributed
net investment loss of $2,416] $ 628,866
=================
(a) May 1, 2000 (commencement of operations) through June 30, 2000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARISTON INTERNET CONVERTIBLE FUND
FINANCIAL HIGHLIGHTS
ELITE SHARES
<S> <C>
PERIOD ENDED
JUNE 30, 2000
(UNAUDITED) (A)
--------------
SELECTED PER SHARE DATA
Net asset value, beginning of period $ 10.00
--------------
Income from investment operations:
Net investment loss (0.05)
Net realized and unrealized gain (loss)
on investments (0.46)
--------------
Total from investment operations (0.51)
--------------
Less distributions:
Distributions from net investment income 0.00
Distributions from net realized gains 0.00
--------------
Total distributions 0.00
--------------
Net asset value, end of period $ 9.49
==============
TOTAL RETURN (5.10)(b)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000) $533
Ratio of expenses to average net assets 2.25% (c)
Ratio of net investment income to
average net assets (2.93)%(c)
Portfolio turnover rate 74.49% (c)
(a) May 1, 2000 (commencement of operations) through June 30, 2000
(b) For a period of less than a full year, the total return is not annualized.
(c) Annualized
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARISTON INTERNET CONVERTIBLE FUND
FINANCIAL HIGHLIGHTS
PREMIER SHARES
<S> <C>
PERIOD ENDED
JUNE 30, 2000
(UNAUDITED) (A)
--------------
SELECTED PER SHARE DATA
Net asset value, beginning of period $ 10.00
--------------
Income from investment operations:
Net investment loss (0.04)
Net realized and unrealized gain (loss)
on investments (0.51)
--------------
Total from investment operations (0.55)
--------------
Less distributions:
Distributions from net investment income 0.00
Distributions from net realized gains 0.00
--------------
Total distributions 0.00
--------------
Net asset value, end of period $ 9.45
==============
TOTAL RETURN (5.50)%(b)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000) $96
Ratio of expenses to average net assets 2.95% (c)
Ratio of net investment income to
average net assets (2.61)%(c)
Portfolio turnover rate 74.49% (c)
(a) May 1, 2000 (commencement of operations) through June 30, 2000
(b) For a period of less than a full year, the total return is not annualized.
(c) Annualized
</TABLE>
<PAGE>
ARISTON FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED)
NOTE 1. ORGANIZATION
Ariston Convertible Securities Fund (the "Convertible Securities Fund") and
Ariston Internet Convertible Fund (the "Internet Convertible Fund"),
collectively the "Funds", were organized as diversified series of the AmeriPrime
Funds (the "Trust") on February 24, 1999 and February 29, 2000, respectively. On
April 30, 1999, the Convertible Securities Fund acquired the assets and assumed
the liabilities of Lexington Convertible Securities Fund (the "Predecessor
Fund") in a tax-free reorganization. The Predecessor Fund commenced operations
on January 20, 1988. The Internet Convertible Fund commenced operations on May
1, 2000. The Trust is established under the laws of Ohio by an Agreement and
Declaration of Trust dated August 8, 1995 (the "Trust Agreement"). The
investment objective of each Fund is total return. The Trust Agreement permits
the Board of Trustees (the "Board") 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
each Fund in the preparation of its financial statements.
SECURITIES VALUATIONS - Common stocks, which are traded on any exchange,
are valued at the last quoted sale price. Lacking a last sale price, a security
is valued at the mean between the last bid and ask price except when, in the
Advisor's opinion, the mean price does not accurately reflect the current value
of the security. When market quotations are not readily available, when the
Advisor determines the mean 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, subject to review and oversight of the
Board of the Trust.
All other securities generally are valued at the mean between the last bid
and ask price, 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. Convertible securities are valued at the greater of
the value determined as described in the preceding sentence and the value of the
shares of common stock into which the securities are convertible (determined as
described in the preceding paragraph). When market quotations are not readily
available, 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 and
oversight 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.
DIVIDENDS AND DISTRIBUTIONS - Each Fund intends to distribute substantially
all of its net investment income as dividends to its shareholders on a quarterly
basis. Each Fund intends to distribute its net long-term capital gains and its
net short-term capital gains at least once a year.
ARISTON FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED) - CONTINUED
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
SECURITIES TRANSACTIONS & INVESTMENT INCOME - Each Fund follows industry
practice and records security transactions on the trade date. The specific
identification method is used for determining gains or losses for financial
statements and income tax purposes. Dividend income is recorded on the
ex-dividend date and interest income is recorded on an accrual basis. Discounts
and premiums on securities purchased are amortized over the life of the
respective securities. During market conditions which cause the underlying
common stocks of a convertible security to greatly increase in value, the
amortization of premium can exceed interest income and the accretion of discount
at levels that may cause the Funds to recognize negative income.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Funds retain Ariston Capital Management Corporation (the "Advisor") to
manage each Fund's investments. The Advisor was founded in 1977. Richard B.
Russell, President and controlling shareholder of the Advisor, is primarily
responsible for the day-to-day management of each Fund's portfolio.
Under the terms of each Fund's management agreement (the "Agreements"), the
Advisor manages the Fund's investments subject to approval of the Board and pays
all of the expenses of the Fund except brokerage commissions, taxes, borrowing
costs (such as (a) interest and (b) dividend expenses on securities sold short),
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 Convertible Securities Fund is obligated to pay the Advisor a fee
computed and accrued daily and paid monthly at an annual rate of 2.25% of the
average daily net assets of the Fund, less the amount of its 12b-1 expenses and
fees and expenses of non-interested person trustees.
The Internet Convertible Fund is obligated to pay the Advisor a fee computed
and accrued daily and paid monthly at an annual rate of 2.25% of the average
daily net assets of the Fund, less the amount of its fees and expenses of
non-interested person trustees. 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 six months ended
June 30, 2000, the Advisor received fees of $232,046 from the Convertible
Securities Fund. For the period May 1, 2000 (commencement of operations) through
June 30, 2000, the Advisor received fees of $1,829 from the Internet Convertible
Fund.
Each Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the
1940 Act (each, a "Plan"). The Plan for the Convertible Securities Fund permits
the Fund to pay directly, or reimburse the Advisor or Distributor, for
distribution expenses in an amount not to exceed 0.25% of the average daily net
assets of the Fund. Expenses of the Convertible Securities Fund will not be
affected by the 12b-1 Plan because the Fund's Advisor does not intend to
activate the Plan through May 1, 2001. The Plan for the Internet Convertible
Fund, which relates only to the Premier class of shares, permits the Fund to pay
directly, or reimburse the Advisor or Distributor, for distribution expenses in
an amount not to exceed 0.70% of the average daily net assets of the Premier
class of shares. For the period May 1, 2000 (commencement of operations) through
June 30, 2000, the Premier shares of the Internet Convertible Fund paid $46 in
12b-1 fees incurred by the Fund.
ARISTON FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED) - CONTINUED
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
Each Fund retains AmeriPrime Financial Services, Inc. (the
"Administrator"), a wholly owned subsidiary of Unified Financial Services, Inc.,
to manage each Fund's business affairs and provide each Fund with administrative
services, including all regulatory reporting and necessary office equipment and
personnel. The Administrator receives a monthly fee from the Advisor equal to an
annual rate of 0.10% of each Fund's assets under $50 million, 0.075% of each
Fund's assets from $50 million to $100 million, and 0.050% of each Fund's assets
over $100 million (subject to a minimum fee of $2,500 per month for the
Convertible Securities Fund, and $1,666 for the Internet Convertible Fund). For
the six months ended June 30, 2000, the Administrator received fees of $15,000
from the Advisor for administrative services provided to the Convertible
Securities Fund. For the period May 1, 2000 (commencement of operations) through
June 30, 2000, the Administrator received fees of $3,333 from the Advisor for
administrative services provided to the Internet Convertible Fund.
Each Fund retains Unified Fund Services, Inc. ("Unified"), a wholly owned
subsidiary of Unified Financial Services, Inc., to act as each Fund's transfer
agent and to provide each Fund with fund accounting services. 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). For the six months ended
June 30, 2000, Unified received fees of $9,492 from the Advisor for transfer
agent services provided to the Convertible Securities Fund. For the period May
1, 2000 (commencement of operations) through June 30, 2000, Unified received
fees of $3,281 from the Advisor for transfer agent services provided to the
Internet Convertible Fund. For its services as fund accountant, Unified receives
an annual fee from the Advisor equal to 0.0275% of each Fund's assets up to $100
million, 0.0250% of each Fund's assets from $100 million to $300 million, and
0.0200% of each Fund's assets over $300 million (subject to various monthly
minimum fees, the maximum being $2,000 per month for assets of $20 million to
$100 million). For the six months ended June 30, 2000, Unified received fees of
$11,500 from the Advisor for fund accounting services provided to the
Convertible Securities Fund. For the period May 1, 2000 (commencement of
operations) through June 30, 2000, Unified received fees of $2,950 from the
Advisor for fund accounting services provided to the Internet Convertible Fund.
The Fund retains AmeriPrime Financial Securities, Inc. ("the Distributor"),
a wholly owned subsidiary of Unified Financial Services, Inc., to act as the
principal distributor of each Fund's shares. There were no payments made to the
Distributor for the six months ended June 30, 2000 for the Convertible
Securities Fund. There were no payments made to the Distributor for the period
May 1, 2000 (commencement of operations) through June 30, 2000 for the Internet
Convertible Fund. Certain members of management of the Administrator and the
Distributor are also members of management of the Trust.
NOTE 4. SHARE TRANSACTIONS
CONVERTIBLE SECURITIES FUND. As of June 30, 2000, there were an unlimited
number of authorized shares for the Fund. Paid in capital at June 30, 2000 was
$15,949,014.
ARISTON FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED) - CONTINUED
NOTE 4. SHARE TRANSACTIONS - CONTINUED
Transactions in shares were as follows:
<TABLE>
<S> <C> <C> <C> <C>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
(UNAUDITED)
SHARES DOLLARS SHARES DOLLARS
Shares sold 531,668 $14,131,053 192,879 $3,785,062
Shares issued in
reinvestment of
distributions 7 172 102,086 2,474,563
Shares redeemed (205,487) (5,254,139) (332,616) (5,963,596)
--------- ------------ ----------- -----------
326,188 $8,877,086 (37,651) $296,029
========= ============ =========== ===========
</TABLE>
INTERNET CONVERTIBLE FUND (ELITE SHARES). As of June 30, 2000, there were an
unlimited number of authorized shares for the Fund. Paid in capital at June 30,
2000 was $546,293.
Transactions in shares were as follows:
FOR THE PERIOD MAY 1, 2000
(COMMENCEMENT OF OPERATIONS) THROUGH
JUNE 30, 2000
(UNAUDITED)
SHARES DOLLARS
Shares sold 56,205 $546,293
Shares issued in
reinvestment of
distributions 0 0
Shares redeemed 0 0
--------- ---------
56,205 $546,293
========= =========
ARISTON FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED) - CONTINUED
NOTE 4. SHARE TRANSACTIONS - CONTINUED
INTERNET CONVERTIBLE FUND (PREMIER SHARES). As of June 30, 2000, there were an
unlimited number of authorized shares for the Fund. Paid in capital at June 30,
2000 was $98,566.
Transactions in shares were as follows:
FOR THE PERIOD MAY 1, 2000
(COMMENCEMENT OF OPERATIONS) THROUGH
JUNE 30, 2000
(UNAUDITED)
SHARES DOLLARS
Shares sold 10,133 $98,566
Shares issued in
reinvestment of
distributions 0 0
Shares redeemed 0 0
---------- ----------
10,133 $98,566
========== ==========
NOTE 5. INVESTMENTS
CONVERTIBLE SECURITIES FUND. For the six months ended June 30, 2000,
purchases and sales of investment securities, other than short-term investments,
aggregated $10,544,957 and $3,127,078 respectively. As of June 30, 2000, the
gross unrealized appreciation for all securities totaled $7,639,497 and the
gross unrealized depreciation for all securities totaled $392,356 for a net
unrealized appreciation of $7,247,141. The aggregate cost of securities for
federal income tax purposes at June 30, 2000 was $16,110,623.
INTERNET CONVERTIBLE FUND. For the period May 1, 2000 (commencement of
operations) through June 30, 2000, purchases and sales of investment securities,
other than short-term investments, aggregated $680,916 and $43,601,
respectively. As of June 30, 2000, the gross unrealized appreciation for all
securities totaled $34, 942 and the gross unrealized depreciation for all
securities totaled $22,011 for a net unrealized appreciation of $12,931. The
aggregate cost of securities for federal income tax purposes at June 30, 2000
was $611,610.
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.
ARISTON FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED) - CONTINUED
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 each 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 June 30, 2000, Charles
Schwab & Co., Inc. beneficially owned, in aggregate, more than 40% of the
Convertible Securities Fund. As of June 30, 2000, Ariston Capital Management
Corp. beneficially owned, in aggregate, more than 35% of the Internet
Convertible Fund Elite shares. As of June 30, 2000, Investec Ernst & Co.
beneficially owned, in aggregate, more than 99% of the Internet Convertible Fund
Premier shares.