1
THE JUMPER STRATEGIC ADVANTAGE FUND
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 1, 1999
This Statement of Additional Information ("SAI") is not a prospectus. It should
be read in conjunction with the Prospectus of Jumper Strategic Advantage Fund
dated November 1, 1999. 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 Unified Fund Services, Inc., 431 North
Pennsylvania Street, Indianapolis, Indiana 46204, or by calling (888) 879-5723.
TABLE OF CONTENTS
PAGE
Description Of The Trust And Fund.............................................1
Additional Information About Fund Investments And Risk Considerations.........2
Investment Limitations .......................................................5
The Investment Advisor .......................................................7
Trustees And Officers.........................................................8
Portfolio Transactions And Brokerage..........................................8
Determination Of Share Price..................................................9
Investment Performance........................................................10
Custodian.....................................................................11
Transfer Agent................................................................11
Accountants...................................................................11
Distributor ..................................................................11
Administrator ...............................................................11
Financial Statements..........................................................11
<PAGE>
DESCRIPTION OF THE TRUST AND FUND
The Jumper Strategic Advantage Fund (the "Fund") was organized as a
diversified series of AmeriPrime Funds (the "Trust") on February 26, 1998, and
commenced operations on October 26, 1998. 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.
The Fund currently offers two classes of shares: "Institutional Class"
shares and "Investor Class" shares. . The Board of Trustees of the Trust does
not anticipate that there will be any conflicts among the interests of the
holders of the different classes of Fund shares. On an ongoing basis, the Board
will consider whether any such conflict exists and, if so, take appropriate
action.
As of October 1, 1999 the following persons may be deemed to
beneficially own 5% or more of the Fund: Tennessee Aquarium, P.O. Box 11048,
Chattanooga, Tennessee, 37401, 96.64%. As a result, Tennessee Aquarium may be
deemed to control the Fund. The officers and Trustees as a group beneficially
owned, as of August 5, 1999, less than 1% of the Fund.
As of October 1, 1999, the officers and Trustees as a group
beneficially owned 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.
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. Illiquid Securities. The Fund will not invest more than 15% of its
net assets in illiquid securities. Securities may be illiquid because they are
unlisted, subject to legal restrictions on resale or due to other factors which,
in the adviser's opinion, raise a question concerning the fund's ability to
liquidate the securities in a timely and orderly way without substantial loss.
Underlying funds and over-the-counter options are frequently illiquid. Illiquid
securities may also present difficult valuation issues.
B. Corporate Debt Securities. Corporate debt securities are bonds or
notes issued by corporations and other business organizations, including
business trusts, in order to finance their credit needs. Corporate debt
securities include commercial paper which consists of short term (usually from
one to two hundred seventy days) unsecured promissory notes issued by
corporations in order to finance their current operations. The Adviser considers
corporate debt securities to be of investment grade quality if they are rated
BBB or higher by Standard & Poor's Corporation ("S&P"), Baa or higher by Moody's
Investors Services, Inc. ("Moody's"), or if unrated, determined by the Adviser
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 25% of the value of its net assets in securities that
are below investment grade. If, as a result of a downgrade, the Fund holds more
than 25% of the value of its net assets in securities rated below investment
grade, the Fund will take action to reduce the value of such securities below
25%.
C. Fixed Income Securities. Fixed income securities include corporate
debt securities, U.S. government securities, mortgage-backed securities, zero
coupon bonds, asset-backed and receivable-backed securities and participation
interests in such securities. Preferred stock and certain common stock
equivalents may also be considered to be fixed income 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.
D. Municipal Securities. Municipal securities are long and short term
debt obligations issued by or on behalf of states, territories and possessions
of the United States, the District of Columbia and their political subdivisions,
agencies, instrumentalities and authorities, as well as other qualifying issuers
(including the U.S. Virgin Islands, Puerto Rico and Guam), the income from which
is exempt from regular federal income tax and exempt from state tax in the state
of issuance. Municipal securities are issued to obtain funds to construct,
repair or improve various public facilities such as airports, bridges, highways,
hospitals, housing, schools, streets and water and sewer works, to pay general
operating expenses or to refinance outstanding debts. They also may be issued to
finance various private activities, including the lending of funds to public or
private institutions for construction of housing, educational or medical
facilities or the financing of privately owned or operated facilities. Municipal
securities consist of tax exempt bonds, tax exempt notes and tax exempt
commercial paper. Municipal notes, which are generally used to provide short
term capital needs and have maturities of one year of less, include tax
anticipation notes, revenue anticipation notes, bond anticipation notes and
construction loan notes. Tax exempt commercial paper typically represents short
term, unsecured, negotiable promissory notes. The Funds may invest in other
municipal securities such as variable rate demand instruments.
The two principal classifications of municipal securities are
"general obligations" and "revenue" bonds. General obligation bonds are backed
by the issuer's full credit and taxing power. Revenue bonds are backed by the
revenues of a specific project, facility or tax. Industrial development revenue
bonds are a specific type of revenue bond backed by the credit of the private
issuer of the facility, and therefore investments in these bonds have more
potential risk that the issuer will not be able to meet scheduled payments of
principal and interest.
The Adviser considers municipal securities to be of
investment grade quality if they are rated BBB or higher by S&P, Baa or higher
by Moody's, or if unrated, determined by the Adviser 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. If, as a result of a downgrade, the Fund holds more than 25%
of the value of its net assets in securities rated below investment grade, the
Fund will take action to reduce the value of such securities below 25%.
E. U.S. Government Securities. U.S. government securities 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.
F. Mortgage-Backed Securities. Mortgage-Backed Securities represent an
interest in a pool of mortgages. These securities, including securities issued
by FNMA and GNMA, provide investors with payments consisting of both interest
and principal as the mortgages in the underlying mortgage pools are repaid.
Unscheduled or early payments on the underlying mortgages may shorten the
securities' effective maturities. The average life of securities representing
interests in pools of mortgage loans is likely to be substantially less than the
original maturity of the mortgage pools as a result of prepayments or
foreclosures of such mortgages. Prepayments are passed through to the registered
holder with the regular monthly payments of principal and interest, and have the
effect of reducing future payments. To the extent the mortgages underlying a
security representing an interest in a pool of mortgages are prepaid, a Fund may
experience a loss (if the price at which the respective security was acquired by
the Fund was at a premium over par, which represents the price at which the
security will be sold upon prepayment). In addition, prepayments of such
securities held by a Fund will reduce the share price of the Fund to the extent
the market value of the securities at the time of prepayment exceeds their par
value. Furthermore, the prices of mortgage-backed securities can be
significantly affected by changes in interest rates. Prepayments may occur with
greater frequency in periods of declining mortgage rates because, among other
reasons, it may be possible for mortgagors to refinance their outstanding
mortgages at lower interest rates. In such periods, it is likely that any
prepayment proceeds would be reinvested by a Fund at lower rates of return.
G. Collateralized Mortgage Obligations (CMOs). CMOs are securities
collateralized by mortgages or mortgage-backed securities. CMOs are issued with
a variety of classes or series, which have different maturities and are often
retired in sequence. CMOs may be issued by governmental or non-governmental
entities such as banks and other mortgage lenders. Non-government securities may
offer a higher yield but also may be subject to greater price fluctuation than
government securities. Investments in CMOs are subject to the same risks as
direct investments in the underlying mortgage and mortgage-backed securities. In
addition, in the event of a bankruptcy or other default of an entity who issued
the CMO held by the Fund, the Fund could experience both delays in liquidating
its position and losses.
H. Zero Coupon and Pay in Kind Bonds. Corporate debt securities and
municipal obligations include so-called "zero coupon" bonds and "pay-in-kind"
bonds. Zero coupon bonds do not make regular interest payments. Instead they are
sold at a deep discount from their face value. Each Fund will accrue income on
such bonds for tax and accounting purposes, in accordance with applicable law.
This income will be distributed to shareholders. Because no cash is received at
the time such income is accrued, the Fund may be required to liquidate other
portfolio securities to satisfy its distribution obligations. Because a zero
coupon bond does not pay current income, its price can be very volatile when
interest rates change. In calculating its dividend, the Funds take into account
as income a portion of the difference between a zero coupon bond's purchase
price and its face value. Certain types of CMOs pay no interest for a period of
time and therefore present risks similar to zero coupon bonds.
The Federal Reserve creates STRIPS (Separate Trading of
Registered Interest and Principal of Securities) by separating the coupon
payments and the principal payment from an outstanding Treasury security and
selling them as individual securities. A broker-dealer creates a derivative zero
by depositing a Treasury security with a custodian for safekeeping and then
selling the coupon payments and principal payment that will be generated by this
security separately. Examples are Certificates of Accrual on Treasury Securities
(CATs), Treasury Investment Growth Receipts (TIGRs) and generic Treasury
Receipts (TRs). These derivative zero coupon obligations are not considered to
be government securities unless they are part of the STRIPS program. Original
issue zeros are zero coupon securities issued directly by the U.S. government, a
government agency, or by a corporation.
Pay-in-kind bonds allow the issuer, at its option, to make
current interest payments on the bonds either in cash or in additional bonds.
The value of zero coupon bonds and pay-in-kind bonds is subject to greater
fluctuation in response to changes in market interest rates than bonds which
make regular payments of interest. Both of these types of bonds allow an issuer
to avoid the need to generate cash to meet current interest payments.
Accordingly, such bonds may involve greater credit risks than bonds which make
regular payment of interest. Even though zero coupon bonds and pay-in-kind bonds
do not pay current interest in cash, the Fund is required to accrue interest
income on such investments and to distribute such amounts at least annually to
shareholders. Thus, the Fund could be required at times to liquidate other
investments in order to satisfy its dividend requirements. The Fund will not
invest more than 5% of its net assets in pay-in-kind bonds.
I. Financial Service Industry Obligations. Financial service industry
obligations include among
others, the following:
(1) Certificates of Deposit. Certificates of deposit are
negotiable certificates evidencing the indebtedness of a commercial bank or a
savings and loan association to repay funds deposited with it for a definite
period of time (usually from fourteen days to one year) at a stated or variable
interest rate.
(2) Time Deposits. Time deposits are non-negotiable deposits
maintained in a banking institution or a savings and loan association for a
specified period of time at a stated interest rate. Time Deposits are considered
to be illiquid prior to their maturity.
(3) Bankers' Acceptances. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft which has been
drawn on it by a customer, which instruments reflect the obligation both of the
bank and of the drawer to pay the face amount of the instrument upon maturity.
J. Asset-Backed and Receivable-Backed Securities. Asset-backed and
receivable-backed securities are undivided fractional interests in pools of
consumer loans (unrelated to mortgage loans) held in a trust. Payments of
principal and interest are passed through to certificate holders and are
typically supported by some form of credit enhancement, such as a letter of
credit, surety bond, limited guaranty, or senior/subordination. The degree of
credit enhancement varies, but generally amounts to only a fraction of the
asset-backed or receivable-backed security's par value until exhausted. If the
credit enhancement is exhausted, certificateholders may experience losses or
delays in payment if the required payments of principal and interest are not
made to the trust with respect to the underlying loans. The value of these
securities also may change because of changes in the market's perception of the
creditworthiness of the servicing agent for the loan pool, the originator of the
loans or the financial institution providing the credit enhancement.
Asset-backed and receivable-backed securities are ultimately dependent upon
payment of consumer loans by individuals, and the certificateholder generally
has no recourse against the entity that originated the loans. The underlying
loans are subject to prepayments which shorten the securities' weighted average
life and may lower their return. As prepayments flow through at par, total
returns would be affected by the prepayments: if a security were trading at a
premium, its total return would be lowered by prepayments, and if a security
were trading at a discount, its total return would be increased by prepayments.
The Fund will not invest more than 5% of its net assets in asset-backed or
receivable-backed securities.
K. Repurchase Agreements. 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. Governtment
("U.S. Government Obligation") (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 the Custodian, other banks
with assets of $1 billion or more and registered securities dealers determined
by the Advisor to be credit worthy. The Advisor monitors the creditworthiness of
the banks and securities dealers with which the Fund engages in repurchase
transactions.
L. Convertible Securities. A convertible security is a bond, debenture,
note, preferred stock or other security that may be converted into or exchanged
for a prescribed amount of common stock of the same or a different issuer within
a particular period of time at a specified price or formula. A convertible
security entitles the holder to receive interest generally paid or accrued on
debt or the dividend paid on preferred stock until the convertible security
matures or is redeemed, converted or exchanged. Convertible securities have
several unique investment characteristics, such as (a) higher yields than common
stocks, but lower yields than comparable nonconvertible securities, (b) a lesser
degree of fluctuation in value than the underlying stock since they have fixed
income characteristics, and (c) the potential for capital appreciation if the
market price of the underlying common stock increases. A convertible security
might be subject to redemption at the option of the issuer at a price
established in the convertible security's governing instrument. If a convertible
security held by the Fund is called for redemption, the Fund may be required to
permit the issuer to redeem the security, convert it into the underlying common
stock or sell it to a third party.
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
this 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, provided that the Fund has an asset coverage of 300% for
all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
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
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.
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 are secured by or represent interests in real estate.
This limitation does not preclude the Fund from investing in
mortgage-related securities or investing in companies engaged in the
real estate business or that have a significant portion of their assets
in real estate (including real estate investment trusts).
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 nonpublicly 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 merge,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment there in
within the limitations imposed by said paragraphs above as of the date of
consummation.
THE INVESTMENT ADVISOR
The Fund's investment advisor is The Jumper Group, Inc. Jay C. Jumper
maybe 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 and pays all of the expenses of the Fund except brokerage, taxes,
interest, expenses which the Fund is authorized to pay pursuant to the
Distribution Plan, 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 Advisor a
fee computed and accrued daily and paid monthly at an annual rate of 0.75% of
the average daily net assets of the Fund. The Advisor may waive all or part of
its fees, 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 October 26,
1998 (commencement of operations) through June 30, 1999, the Fund paid advisory
fees of $24,563.
The Advisor retains the right to use the name "Jumper" in connection
with another investment company or business enterprise with which the Advisor
may become associated. The Trust's right to use the name "Jumper" 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.
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 OCCUPATIONS DURING PAST 5 YEARS
==================================== ---------------- ======================================================================
<S> <C> <C>
*Kenneth D. Trumpfheller President and President, Treasurer and Secretary of AmeriPrime Financial Services,
Age: 41 Trustee Inc., the Fund's administrator, and AmeriPrime Financial Securities,
1793 Kingswood Drive Inc., the Fund's distributor, since 1994. Prior to December 1994, a
Suite 200 senior client executive with SEI Financial Services.
Southlake, Texas 76092
==================================== ---------------- ======================================================================
Paul S. Bellany Secretary, Secretary, Treasurer and Chief Financial Officer of AmeriPrime
Age: 40 Treasurer Financial Services, Inc. and AmeriPrime Financial Securities, Inc.;
1793 Kingswood Drive various positions with Fidelity Investments from 1987 to 1998; most
Suite 200 recently Fund Reporting Unit Manager.
Southlake, Texas 76092
==================================== ---------------- ======================================================================
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil and gas
Age: 41 services company; various positions with Carbo Ceramics, Inc., oil
2001 Indianwood Avenue field manufacturing/supply company, from 1984 to 1997, most recently
Broken Arrow, OK 74012 Vice President of Marketing.
==================================== ================ ======================================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of Legacy
Age: 52 Trust Company since 1992; President and Director of Heritage Trust
600 Jefferson Street Company from 1994-1996; Vice President and Manager of Investments of
Suite 350 Kanaly Trust Company from 1988 to 1992.
Houston, TX 77063
==================================== ================ ======================================================================
</TABLE>
<PAGE>
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.
<TABLE>
==================================== ----------------------- ==================================
<CAPTION>
AGGREGATE TOTAL COMPENSATION
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
<S> <C> <C>
Kenneth D. Trumpfheller 0 0
==================================== ----------------------- ==================================
==================================== ----------------------- ==================================
Steve L. Cobb $11,029 $11,029
==================================== ----------------------- ==================================
==================================== ======================= ==================================
Gary E. Hippenstiel $11,029 $11,029
==================================== ======================= ==================================
</TABLE>
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.
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 October 26, 1998 (commencement of
operations) through June 30, 1999, the Fund paid brokerage commissions of $0.
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
everyday 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
(over the one and five year periods and the period from initial public offering
through the end of the Fund's most recent fiscal year) 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.
In addition to providing average annual total return, the Fund may
also provide non-standardized quotations of total return for differing periods
and may provide the value of a $10,000 investment (made on the date of the
initial public offering of the Fund's shares) as of the end of a specified
period. T
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 October
26, 1998 (commencement of operations) through June 30, 1999, the Fund's total
return was 0.51%.
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 cash equivalent market in general. For
example, the Fund may use the Donahue Money Market Index, 90 day treasury bills,
or other money market index published by an independent third party.
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 Morning star, 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
Unified Fund Services, Inc., 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, 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. In addition, Unified
Fund Services, Inc. provides the Fund with certain monthly reports and
record-keeping services. Fund accounting is provided by American Data Services,
Inc.("ADS"), Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, New York
11760. ADS receives an annual fee equal to .0275% of average net assets, subject
to a minimum monthly fee of $800 to $2,000 based on net assets. For the period
October 26, 1998 (commencement of operations) through June 30, 1999, ADS
received $17,610 from the Advisor (not the Fund) for those services.
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 October 26, 1998 (commencement of operations) through
June 30, 1999, the Administrator received $20,000 from the Advisor (not the
Fund) for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the statement of additional information are incorporated herein
by reference to the Fund's Annual Report to the shareholders for the period
ended June 30, 1999. The Trust will provide the Annual Report without charge by
calling the Fund at (888)-879-5723.
