<PAGE>
Corbin Small-Cap Value Fund
November 20, 2000
Dear Shareholder:
This is the week of Thanksgiving, and, in reflecting upon this year, I realize
that I and the Fund's shareholders have much to be thankful for. At this time,
the nation has not concluded the presidential election, the economy appears to
be slowing, the dot.coms have collapsed, last year's fascination with technology
and telecommunications has evaporated, and now the press is starting to use the
"V" word again. The "V" word (as in value) has not been much of a force on Wall
Street over the past few years, as investors focused their attention on the
vapors that were passing as businesses on Wall Street. While these are things
that were addressed in last year's annual report, they bear mentioning as a
matter of history, as well as evidence of how fast people's attitudes change
these days. It certainly seems that the pendulum has begun a multi-year swing
back toward the kinds of companies and sectors that we customarily invest in for
the Fund.
The overall level of investor frustration is high. Investors who had a belief in
true economic value have been frustrated the last several years, while the
growth crowd have seen their portfolio values massacred over the last six
months. Bonds have produced a low total return, and international stocks have
been mediocre performers. What is the next big thing, and when will it come to
pass? I believe that the answers lie right in your hands, for a number of
reasons. While clearly I am a biased source of information, allow me to make the
case as strongly as possible for small-cap value.
In the slower growth environment that we are entering, companies are going to
look for ways to grow their businesses, and one of the major opportunities is
through mergers/acquisitions. In the last few years, the bulk of these
acquisitions/mergers have centered on large business combinations that have
involved stock swaps. Due to the flagging price of most companies' stocks, this
is no longer an option. Many of these companies are also in a position in which
they cannot afford earnings dilution or cash flow problems. Therefore, the
acquisitions made must be cheap, profitable companies that can be easily
acquired for cash or financed by lending syndicates. The Fund has experienced
this activity several times in the last few months. Firms like Republic Group
and Taco Cabana are examples of this principle in action.
In addition, solidly profitable companies have reduced risk in a sluggish market
environment because they can pay down debt, repurchase shares, or take advantage
of other opportunities not available to the more leveraged/less profitable
firms. Currently, over one-third of our portfolio companies are repurchasing
their own shares in the marketplace, in some cases in large quantities. This
means that current shareholders will get a larger percentage of future earnings,
eventually leading to a higher stock price. Stock prices follow profits in the
long term.
Coming out of an economic slowdown is when small-cap value stocks shine,
because, in a profit-filled environment with a growing business sector, smaller
companies can usually grow at a much faster pace than larger companies. This
fact, coupled with attractive valuations, leads investors to bid up the prices
of such companies. This in turn attracts more investors and causes prices to
move higher. This is the scenario I envision for small-cap value stocks.
In last year's report, I talked about "the giant sucking sound" that had removed
money from all sectors of the marketplace to go into technology and the
hyper-growth stocks of the day. That has come to an end, and investors will feel
the consequences of those decisions for years to come. Small-cap value is not
the "New New Thing," it is the same thing that it has been over the years: the
best asset class to be in for maximizing return, while minimizing risk, over the
long term. I said in one report a few years ago that what we do here will not be
measured over quarters, but over years. While our first calendar year (1998) was
a disaster for small-cap value investors in general, and our Fund in particular,
in the 1999 calendar year this was one of the best small-cap value funds in the
country. For the 12-month period ending December 31, 1999, Morningstar ranked it
21st out of 235 funds in that category. I am going to continue to work as hard
as possible to insure the success of this venture for a number of reasons, chief
among them being that my name is on this Fund, my liquid net worth is primarily
invested in this Fund, and most members of my family have holdings in it. In
addition, I know many of the Fund's shareholders and do not wish to let them
down. I feel that great days are ahead, and I look forward to enjoying them
together.
PERFORMANCE REVIEW
For the six-month period ended October 31st, your Fund returned -10.57%, versus
the Russell 2000 Index at -1.11% and the S&P 600 Small-Cap Index at 6.83%. For
the year, the Corbin Small-Cap Value Fund returned 5.33%, and the Russell 2000
and S&P 600 Small-Cap were at 17.41% and 20.18%, respectively.
Returns for the Year Ended October 31, 2000
------------------------------------------------------------------------------
Fund/Index 1 Year Average Annual Total Return
Since Inception
June 30, 1997
------------------------- ----------- ----------------------------------------
Corbin Small-Cap Fund 5.33% -7.98%
S&P 600 20.18% 10.02%
Russell 2000 17.41% 8.11%
-------------------------------------------------------------------------------
Corbin S&P 600 Russell 2000
----------------------------------------------------
6/30/97 10,000 10,000 10,000
7/31/97 10,310 10,629 10,465
10/31/97 11,030 11,116 10,984
1/31/98 10,577 11,037 10,928
4/30/98 11,173 12,577 12,288
7/31/98 9,597 11,031 10,708
10/31/98 7,051 9,887 9,683
1/31/99 6,593 10,969 10,965
4/30/99 7,126 10,777 11,151
7/31/99 7,882 11,564 11,501
10/31/99 7,189 11,075 11,123
1/31/00 8,255 12,098 12,910
4/28/00 8,468 12,978 13,205
7/31/00 7,573 13,011 13,085
10/31/00 7,573 13,864 13,059
The chart shows the value of a hypothetical initial investment of $10,000 in the
Fund, the S&P 600 Index and the Russell 2000 Index on June 30, 1997 (the
inception of the Fund) and held through October 31, 2000. The S&P 600 Index and
the Russell 2000 Index are widely recognized unmanaged indices of common stock
prices. Performance figures include the change in value of the stocks in the
indices and reinvestment of dividends, and are not annualized. The index returns
do not reflect expenses, which have been deducted from the Fund's return. THE
FUND'S RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF FUTURE
RESULTS.
I dislike using these comparison periods, because they are not the way I that I
view performance. When I judge performance, I usually look at calendar quarters
and years. During the period December 31, 1998, through December 31, 1999, the
Fund's return was 26.50%, the Russell 2000 was 21.35%, and the S&P 600 Small-Cap
was 12.10%. And for the period January 1, 2000 to October 31, 2000, the Fund's
return was -11.35%, the Russell 2000 was -0.47%, and the S&P 600 Small-Cap was
11.11%.
The Fund's performance would probably have been spectacular this year if it had
not been for one decision: not selling Titan Corporation in the month of March.
Titan had been purchased by the Fund at between $5 and $6 per share in 1998, and
in March of 2000 it briefly touched $60 per share. Since that time, it has
retreated to about $20 per share. While we did sell some on the way down, the
sales prices did not approach the stock's price in March. We have since
repurchased that position and have added to it. In the short term, the stock did
not help performance. In the long term, I believe that this could be one of the
most profitable stocks of our time.
FIVE STOCKS TO WATCH
I would like to highlight a few of the Fund's holdings that we believe will be
particularly interesting over the next year. These are:
Titan Corporation - The company is primarily in the defense business, but has
three rapid-growth subsidiaries that are outgrowths of its primary business. The
first, Cayenta.com, is an information technology company. The second, Surebeam,
is in the food-sterilization business. The third, Titan Technologies, is in the
mobile-telecom business. We believe that at least one of these fast-growth
subsidiaries will be brought public in 2001, unlocking value. The defense
business should continue its steady growth, making acquisitions and building
value in a consolidating industry.
Successories, Inc. - The company is a leader in the motivational and
people-recognition business. Currently, it has just finished the process of
cleaning up its balance sheet through a rights offering. Jack Miller, the
well-known Chicago catalog entrepreneur, has used the offering to increase his
stake in the company to 27% and serves as the company's chairman of the board.
The company has high-margin products and an improving financial position, which,
when coupled with sales growth, could yield spectacular profitability.
Lancer Corporation- The company provides soft-drink dispensing equipment and
valve systems worldwide. Lancer's products are primarily used to dispense
Coca-Cola, one of the best-known brand names in the world.
Duckwall-Alco Stores Inc. - Duckwall operates general merchandise stores in
Midwestern and Southwestern towns with under 20,000 residents. The company is
currently trading at a very cheap valuation, is repurchasing shares, and is
looking for other ways to enhance shareholder value.
VTEL Corporation- VTEL is one of the largest players in the area of digital
video communications. The company is moving from a hardware-based platform to
software-based products. It is looking forward to quick revenue growth as it
attempts to build a large service business based on providing the expertise to
build and enable video over private networks.
CONCLUSION
In my opinion, the time is rapidly approaching when the Fund's investors will be
rewarded for their patience. We have stayed the course, have remained faithful
to our discipline, and have been diligent in our research.
If you ever have any questions or comments about the Fund, please let me know. I
am willing to do what it takes to make this a successful experience for all
shareholders. If you would like to reach me, please e-mail me at
[email protected], call me, or send a letter to our office in Fort Worth.
As always, I thank you for your faith in our efforts. We are working hard to
make your investment profitable, and we appreciate your support over the last
year.
Sincerely,
David A. Corbin, CFA
President & Chief
Investment Officer
<PAGE>
Corbin Small-Cap Value Fund
Schedule of Investments - October 31, 2000
<TABLE>
<S> <C> <C>
Common Stocks - 91.2% Shares Value
Basic Industry - 8.9%
Chemicals - 4.8%
Schulman A. , Inc. 5,000 $ 54,687
International Flavors & Fragrance, Inc. 5,000 83,750
----------------
138,437
----------------
Steel - 4.1%
Quanex Corp. 6,000 118,875
----------------
TOTAL BASIC INDUSTRIES 257,312
----------------
Durables - 13.8%
Autos & Trucks - 3.0%
Rush Enterprises, Inc. (a) 9,700 47,894
Wabash National Corp. 4,715 37,720
----------------
85,614
----------------
Electrical Equipment - 4.1%
Hubbell, Inc. - Class B 5,000 119,687
----------------
Machinery - 6.7%
Lancer Corp. (a) 28,000 175,000
Perceptron, Inc. (a) 7,200 19,238
----------------
194,238
----------------
TOTAL DURABLES 399,539
----------------
Energy - 3.3%
Offshore Construction - 3.3%
Unifab International, Inc. (a) 10,000 96,250
----------------
Financials - 3.9%
Banks - 1.9%
First Financial Bankshares, Inc. 1,800 55,350
----------------
Specialty Finance - 2.0%
Delta Financial Corp. (a) 20,000 10,000
Onyx Acceptance Corp. (a) 13,000 46,313
----------------
56,313
----------------
TOTAL FINANCE 111,663
----------------
Housing & Construction - 1.0%
Fabricated - 1.0%
NCI Building Systems, Inc. (a) 1,800 28,013
----------------
Corbin Small-Cap Value Fund
Schedule of Investments - October 31, 2000
Common Stocks - continued Shares Value
Media & Leisure - 18.3%
Publishing - 3.0%
Thomas Nelson Publishers, Inc. 13,000 $ 86,937
----------------
Restaurants - 13.0%
BUCA, Inc. (a) 7,000 109,375
Lone Star Steakhouse & Saloon, Inc. 10,000 84,375
Pizza Inn, Inc. 31,000 93,000
Taco Cabana, Inc. - Class A (a) 10,300 86,585
----------------
373,335
----------------
Television - 2.3%
Hispanic Television Network (a) 20,000 67,500
----------------
TOTAL MEDIA & LEISURE 527,772
----------------
Non-Durables - 5.8%
Beverages - 3.0%
Liqui - Box Corp. 2,400 85,950
----------------
Family Services - 2.8%
Koala Corp. (a) 8,000 80,000
----------------
TOTAL NON-DURABLES 165,950
----------------
Retail & Wholesale - 11.3%
General Merchandise - 3.5%
Duckwall - Alco Stores, Inc. (a) 13,000 100,750
----------------
Grocery Stores - 3.4%
Ingles Markets, Inc. - Class A 10,000 98,750
----------------
Specialty Stores - 4.4%
Successories, Inc. (a) 75,000 126,562
----------------
TOTAL RETAIL & WHOLESALE 326,062
----------------
Corbin Small-Cap Value Fund
Schedule of Investments - October 31, 2000
Common Stocks - continued Shares Value
Technology - 24.9%
Consulting Services - 12.7%
Nextera Enterprises, Inc. (a) 47,300 $ 76,863
VTEL Corp. (a) 154,600 289,875
----------------
366,738
----------------
Electronic Defense - 12.2%
Herley Industries, Inc. (a) 5,500 112,062
Titan Corp. (a) 18,000 240,750
----------------
352,812
----------------
TOTAL TECHNOLOGY 719,550
----------------
COMMON STOCKS (Cost $3,254,360) 2,632,111
----------------
Principal
Amount Value
Money Market Securities - 12.5%
Firstar Treasury Fund, 5.55% (b) (Cost $361,371) 361,371 $ 361,371
----------------
TOTAL INVESTMENTS - 103.7% (Cost $3,615,731) 2,993,482
----------------
Other assets less liabilities - (3.7)% (105,884)
----------------
Total Net Assets - 100.0% $ 2,887,598
================
(a) Non-income producing
(b) Variable rate security; the coupon rate shown represents the rate at October
31, 2000.
</TABLE>
See accompanying notes which are an integral part of the financial statements.
<PAGE>
<TABLE>
<S> <C> <C>
Corbin Small-Cap Value Fund October 31, 2000
Statement of Assets & Liabilities
Assets
Investment in securities, at value (cost $3,615,731) $ 2,993,482
Cash 12,144
Receivable for fund shares sold 1,475
Interest receivable 1,721
Dividends receivable 675
-------------------
Total assets 3,009,497
Liabilities
Accrued investment advisory fee $ 2,873
Payable for securities purchased 107,995
Payable for fund shares redeemed 11,031
------------------
Total liabilities 121,899
-------------------
Net Assets $ 2,887,598
===================
Net Assets consist of:
Paid - in capital $ 3,880,260
Accumulated undistributed net investment income 4,908
Accumulated net realized loss on investments (375,321)
Net unrealized depreciation on investments (622,249)
-------------------
Net Assets, for 406,045 shares $ 2,887,598
===================
Net Asset Value
Net Assets
Offering price and redemption price per share ($2,887,598/406,045) $ 7.11
===================
</TABLE>
See accompanying notes which are an integral part of the financial statements.
<PAGE>
Corbin Small-Cap Value Fund
Statement of Operations for the year ended October 31, 2000
<TABLE>
<S> <C> <C>
Investment Income
Dividend income $ 29,343
Interest income 10,432
---------------
Total Income 39,775
Expenses
Investment advisory fee $ 33,423
Trustees' fees 3,064
---------------
Total expenses before reimbursement 36,487
Reimbursed expenses (3,064)
---------------
Total operating expenses 33,423
---------------
Net Investment Income 6,352
---------------
Realized & Unrealized Gain (Loss)
Net realized gain on investment securities 477,022
Change in net unrealized depreciation
on investment securities (395,107)
---------------
Net realized & unrealized gain on investment securities 81,915
---------------
Net increase in net assets resulting from operations $ 88,267
===============
</TABLE>
See accompanying notes which are an integral part of the financial statements.
<PAGE>
Corbin Small-Cap Value Fund
Statement of Changes in Net Assets
<TABLE>
<S> <C> <C>
Year Year
ended ended
October 31, October 31,
2000 1999
------------------- -------------------
Increase/(Decrease) in Net Assets
Operations
Net investment income (loss) $ 6,352 $ (4,598)
Net realized gain (loss) on investment securities 477,022 (300,255)
Change in net unrealized appreciation (depreciation) (395,107) 327,949
------------------- -------------------
Net increase in net assets resulting from operations 88,267 23,096
------------------- -------------------
Distributions to shareholders
From net investment income 0 0
From net realized gain 0 0
------------------- -------------------
Total distributions 0 0
------------------- -------------------
Share Transactions
Net proceeds from sale of shares 1,151,984 747,375
Shares issued in reinvestment of dividends 0 0
Shares redeemed (646,942) (765,186)
------------------- -------------------
Net increase(decrease) in net assets resulting
from share transactions 505,042 (17,811)
------------------- -------------------
Total increase in net assets 593,309 5,285
Net Assets
Beginning of period 2,294,289 2,289,004
------------------- -------------------
End of period [including accumulated net investment
income (loss) of $4,908 and $(1,444), respectively] $ 2,887,598 $ 2,294,289
=================== ===================
</TABLE>
See accompanying notes which are an integral part of the financial statements.
<PAGE>
Corbin Small-Cap Value Fund
Financial Highlights
<TABLE>
<S> <C> <C> <C> <C>
Year Year Year Period
Ended ended ended ended
October 31, October 31, October 31, October 31,
2000 1999 1998 1997 (a)
----------------- ----------------- ----------------- -----------------
Selected Per Share Data
Net asset value, beginning of period $ 6.75 $ 6.62 $ 11.03 $ 10.00
----------------- ----------------- ----------------- -----------------
Income from investment operations:
Net investment income (loss) 0.02 (0.01) (0.01) 0.00
Net realized and unrealized gain (loss) 0.34 0.14 (3.76) 1.03
----------------- ----------------- ----------------- ----------------
Total from investment operations 0.36 0.13 (3.77) 1.03
----------------- ----------------- ----------------- -----------------
Less Distributions
From net investment income 0.00 0.00 (0.01) 0.00
From net realized gain 0.00 0.00 (0.63) 0.00
----------------- ----------------- ----------------- ----------------
Total distributions 0.00 0.00 (0.64) 0.00
----------------- ----------------- ----------------- -----------------
Net asset value, end of period $ 7.11 $ 6.75 $ 6.62 $ 11.03
================= ================= ================= =================
Total Return 5.33% 1.96% (36.07)% 10.30% (b)
Ratios and Supplemental Data
Net assets, end of period (000) $ 2,888 $ 2,294 $ 2,289 $ 1,334
Ratio of expenses to average net assets 1.25% 1.25% 1.25% 1.23% (c)
Ratio of expenses to average net assets
before reimbursement 1.36% 1.31% 1.30% 1.23% (c)
Ratio of net investment income to
average net assets 0.24% (0.20)% (0.15)% 0.00%
Ratio of net investment income to
average net assets before reimbursement 0.12% (0.26)% (0.20)% 0.00%
Portfolio turnover rate 94.69% 65.66% 86.42% 20.41% (c)
</TABLE>
(a) June 30, 1997 (commencement of operations) to October 31, 1997
(b) For periods of less than a full year, total returns are not annualized.
(c) Annualized
See accompanying notes which are an integral part of the financial statements.
<PAGE>
PAGE>
Corbin Small-Cap Value Fund
Notes to Financial Statements
October 31, 2000
NOTE 1. ORGANIZATION
The Corbin Small-Cap Value Fund (the "Fund") was organized as a series of the
AmeriPrime Funds, an Ohio business trust (the "Trust") on June 10, 1997, and
commenced operations on June 30, 1997. The Fund is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The investment objective of the Fund is to
provide long-term capital appreciation to its shareholders. The Declaration of
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 the
Fund in the preparation of its financial statements.
Securities Valuation - Securities, which are traded on any exchange or on the
NASDAQ over-the-counter market, are valued at the last quoted sale price.
Lacking a last sale price, a security is valued at its last bid price except
when, in the opinion of the Advisor (as such term is defined in note 3 of this
document), the last bid price does not accurately reflect the current value of
the security. All other securities for which over-the-counter market quotations
are readily available are valued at their last bid price. When market quotations
are not readily available, when the Advisor determines the last bid price does
not accurately reflect the current value, or when restricted securities are
being valued, such securities are valued as determined in good faith by the
Advisor, in conformity with guidelines adopted by and subject to review of the
Board.
Fixed-income securities generally are valued by using market quotations, but may
be valued on the basis of prices furnished by a pricing service when the Advisor
believes such prices accurately reflect the fair market values of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith by the Advisor,
subject to review of the Board. Short-term investments in fixed-income
securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
Federal Income Taxes - The Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains. Loss carryforwards total $375,321 as of October 31,
2000: $300,255 expiring in 2007, and $75,066 expiring in 2006.
Dividends and Distributions - The Fund intends to distribute substantially all
of its net investment income as dividends to its shareholders on at least an
annual basis. The Fund intends to distribute its net long-term capital gains and
its net short-term capital gains at least once a year.
Other - The Fund follows industry practice and records security transactions on
the trade date. The specific identification method is used for determining gains
or losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date, and interest income is recorded on an accrual
basis. Discounts and premiums on securities purchased are amortized over the
life of the respective securities.
Corbin Small-Cap Value Fund
Notes to Financial Statements
October 31, 2000 - continued
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains Corbin & Company (the "Advisor") to manage the Fund's
investments. David A. Corbin, President of the Advisor, is primarily responsible
for the day-to-day management of the Fund's portfolio.
Under the terms of the management agreement (the "Agreement"), the Advisor
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of the Fund except brokerage fees and commissions,
taxes, interest and, 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 1.25% of
the average daily net assets of the Fund. It should be noted that most
investment companies pay their own operating expenses directly, while the Fund's
expenses, except those specified above, are paid by the Advisor. For the year
ended October 31, 2000, the Advisor received a fee of $33,423 from the Fund. The
Advisor has contractually agreed to reimburse other expenses to maintain total
fund operating expenses at the rate of 1.25% of net assets through March 1,
2001. For the year ended October 31, 2000, the Advisor reimbursed expenses of
$3,064. There is no assurance that such contractual agreement will continue in
the future.
Effective October 12, 2000, AmeriPrime Financial Services, Inc. and Unified
Fund Services, Inc. ("Unified"), both wholly owned subsidiaries of Unified
Financial Services, Inc., merged with one another. Prior to the merger,
Ameriprime Financial Services, Inc. served as Administrator to the Fund. The
result of this merger is now Unified Fund Services, Inc., still a wholly owned
subsidiary of Unified Financial Services, Inc.
The Fund retains Unified Fund Services, Inc., a wholly owned subsidiary of
Unified Financial Services, Inc., to manage the Fund's business affairs and
provide the Fund with administrative, transfer agency, and fund accounting
services, including all regulatory reporting and necessary office equipment and
personnel. The Advisor paid all administrative, transfer agency, and fund
accounting fees on behalf of the Fund per the management agreement. 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 the Fund's shares. There were no payments made to the Distributor
for the year ended October 31, 2000. Certain members of management of Unified
Fund Services, Inc. and the Distributor are also directors and/or officers of
Trust.
Corbin Small-Cap Value Fund
Notes to Financial Statements
October 31, 2000 - continued
NOTE 4. SHARE TRANSACTIONS
As of October 31, 2000, there were an unlimited number of authorized shares for
the Fund. Paid-in capital at October 31, 2000 was $3,880,260.
Transactions in shares were as follows:
Year ended Year ended
October 31, 2000 October 31, 1999
Shares Dollars Shares Dollars
Shares sold 151,045 $1,151,984 114,423 $747,375
Shares issued in
reinvestment of
dividends 0 0 0 0
Shares redeemed (85,113) (646,942) (120,150) (765,186)
--------- ---------- ------------ ---------
65,932 $ 505,042 (5,727) $(17,811)
========= ========== ============ ==========
NOTE 5. INVESTMENTS
For the year ended October 31, 2000, purchases and sales of investment
securities, other than short-term investments, aggregated $2,708,903 and
$2,344,641, respectively. The gross unrealized appreciation for all securities
totaled $138,984, and the gross unrealized depreciation for all securities
totaled $761,233, for a net unrealized depreciation of $622,249. The aggregate
cost of securities for federal income tax purposes at October 31, 2000 was
$3,615,731.
NOTE 6. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 7. RELATED PARTY TRANSACTIONS
The Advisor is not a registered broker-dealer of securities and thus does not
receive commissions on trades made on behalf of the Fund. The beneficial
ownership, either directly or indirectly, of more than 25% of the voting
securities of a Fund creates a presumption of control of the Fund, under Section
2(a)(9) of the Investment Company Act of 1940. As of October 31, 2000, Charles
Schwab & Co., for the benefit of its customers, beneficially owned over 41% of
the Fund.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and Board of Trustees
Corbin Small-Cap Value Fund
We have audited the accompanying statement of assets and liabilities of the
Corbin Small-Cap Value Fund, including the schedule of portfolio investments as
of October 31, 2000, the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the two years in the
period then ended and for the period of June 30, 1997 (commencement of
operation) through October 31, 1997. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 2000, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Corbin Small-Cap Value Fund as of October 31, 2000, the results of their
operations for the year then ended, the changes in their net assets for each of
the two years in the period then ended, and the financial highlights for each of
the two years in the period then ended, and for the period of June 30, 1997
(commencement of operations) through October 31, 1997, in conformity with
generally accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
November 19, 2000
<PAGE>
Fountainhead Kaleidoscope Fund Annual Report
October 31, 2000 marked the end of Fountainhead Kaleidoscope's first fiscal
year. We are proud to announce that it was a successful one as the Fund handily
outperformed all of its comparable benchmarks. Kaleidoscope returned 44.9% for
the one-year period ended 10/31/00, while the Russell 2000 Index returned 17.4%
and the S&P 500 Index returned 6.1% over the same period.
Returns for the Year Ended October 31, 2000
---------------------------------------- ----------------------------------
Fund/Index Total Return
Since Inception
November 1, 1999
---------------------------------------- ----------------------------------
Fountainhead Kaleidoscope Fund 44.9%
---------------------------------------- ----------------------------------
S&P 500 Index 6.1%
Russell 2000 Index 17.4%
---------------------------------------- ----------------------------------
Fountainhead Kaleidoscope Russell 2000 S&P 500
Fund - $14,490 Index - $11,742 Index - $10,608
$10,000 $10,000 $10,000
11/99 $12,600 $10,598 $10,203
12/99 $13,800 $11,798 $10,804
1/00 $12,820 $11,609 $10,261
2/00 $12,860 $13,525 $10,067
3/00 $13,600 $12,634 $11,051
4/00 $13,470 $11,873 $10,719
5/00 $13,280 $11,181 $10,499
6/00 $14,570 $12,156 $10,758
7/00 $14,280 $11,765 $10,590
8/00 $14,970 $12,663 $11,247
9/00 $14,470 $12,291 $10,653
10/00 $14,490 $11,742 $10,608
The Chart shows the value of a hypothetical initial investment of $10,000 in the
Fund, the Russell 2000 Index, and the S&P 500 Index on November 1, 1999 (the
inception of the Fund) and held through October 31, 2000. The Russell 2000 Index
and S&P 500 Index are widely recognized, unmanaged indices of common stock
prices. Performance figures include the change in value of the stocks in the
indices and the reinvestment of dividends; they are not annualized. The index
returns do not reflect expenses, which have been deducted from the Fund's
return. THE FUND'S RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS.
During the Fund's first fiscal year, the market environment was very favorable
from November 1999 through early spring 2000. In March 2000, the financial
markets took a turn for the worse and have traded in a volatile and generally
downward trend. Despite a less-than-favorable environment, we were able to
successfully uncover some diamonds in the rough, whose values were eventually
recognized by the market. ReliaStar Financial, VoiceStream Wireless and Dura
Pharmaceuticals all entered into agreements to be acquired during the year,
appreciating 99%, 6%, and 184%, respectively. In addition to these stocks, the
Fund was helped by our healthcare holdings (AmeriSource Health +268% for the
year end 10/31/00, St. Jude Medical +106%, Watson Pharmaceuticals +85%, Beckman
Coulter +47%, and King Pharmaceuticals +40%), our financial issues (ACE Limited
133%, Countrywide Credit +52%, and LaBranche +31%), select media/broadcasting
stocks (Gemstar International Group +74% and Meredith Corp. +40%), a couple of
food/soft drink companies (Pepsi Bottling Group +55% and Wild Oats Markets
+37%), and some special situations (Equifax +69%, Charter Communications +49%,
and Broadwing +36%).
The Fund's results were hampered, on the other hand, by some of our
telecommunications holdings (Viatel, Intermedia Communications, and Flag
Telecom) and by several of our cable/media positions (PrimaCom AG, Granite
Broadcasting, and Adelphia Communications).
Going forward, we believe that the macro environment may continue to be
difficult over the intermediate-term, as the economy slows and the credit
markets continue to be constrained. However, the longer-term picture appears to
be an optimistic one. Although painful to many, the recent pullback in share
prices has been positive for several reasons, but two in particular. First, much
of the speculative froth has been flushed out of the stock market as
Internet-related start-ups with no credible business plans have been decimated.
In addition, many so-called "safe", quality high P/E growth stocks such as
Nortel (-55% from its 52-week high), Home Depot (-44%), Circuit City (-80%), and
Intel (-47%), Cisco (-36%), Oracle (-41%), Microsoft (-43%), Dell (-58%), and
Lucent (-70%), descended to earth as their valuation levels began to compress
and as investors began reevaluating the multiples they wanted to pay for these
former large-cap growth darlings.
The positive implication of these developments is that as capital does flow back
into the equity markets, it should go to viable, "real" companies, which have
valuations that are more realistic.
-------------------------
* Unlike a traditional value manager who buys solely low P/E, low price/book,
low price/sales, or low price/cash flow stocks; the Fund may own some stocks
which have traditionally been classified as growth stocks. The Advisor utilizes
a broader definition of value, which includes purchasing stocks, which are
trading at either a discount to their five-year projected growth rate, or at a
discount to their private-market value. The fund's Advisor looks favorably at
purchasing stocks of companies, which are growing their earnings, it is just
sensitive to the price it will pay for that growth. In the Advisor's opinion,
this approach allows for more flexibility and provides the opportunity for the
Advisor to take advantage of more opportunities in the market.
This, in turn, should lead to a more rational and healthy market. In addition,
this should have positive economic implications, as capital should be allocated
to more productive and efficient areas of the economy, which have true
viability, not those companies which receive major inflows of money only to
cease to exist after 18 to 24 months.
Most investors have heard the phrase "reversion to the mean." This terminology,
used constantly in recent years, contrasts the high double-digit returns that
have been generated over the last few years as evidenced by the major
cap-weighted equity indices, such as the S&P 500 or the Dow Jones Industrial
Average, with historical norms. However, rather than being just a theoretical
issue, it now appears likely that the major indices may be returning to their
long-term average returns of 10% to 12%, and that the days of "easy money" may
well be gone. With that said, the implications of this possibility are not all
that negative, as the last several quarters bear striking similarities to the
1972 through 1974 period when the broader market declined substantially in 1972
and 1973, but the major indices did not reflect the anguish until 1973 and 1974,
after the Nifty Fifty finally broke down. As was the case during that prior time
period, the broader market in recent times started its decline in the spring of
1998 and continued through 1999; despite the pain felt by the majority of market
participants, the S&P 500 and NASDAQ Composite all posted high double-digit
returns during that time frame. Although higher returns were posted by the major
averages, they were not reflective of a healthy market. If a handful of the
largest tech stocks (which because of their large market caps, have returns
which impact the indices by a larger degree than the smaller counterparts--often
distorting returns), the indices would have been in a negative territory. This
skewed result essentially masked the difficulties borne by approximately 80% to
90% of stock prices during 1998 and the first part of 1999. Just as in the 1973
- 1974 period, the major indices turned into negative territory this year,
although many industry groups of the broader market (such as healthcare,
financials, and energy) were generally rising. Although it is unlikely that the
downturn will be as severe or as long lasting as the early `70s, the
similarities of the timing are interesting. In addition, indeed, we may be
closer to the proverbial light at the end of the tunnel.
Going forward, there are several reasons why the worst may actually be behind us
and the equity markets should begin to stabilize and produce modest positive
results over the next year or so. During the months of September and October,
many mutual funds were heavy sellers as they took losses to offset capital gains
realized earlier in the year. During this same period, and continuing into the
end of the calendar year, there have been both heavy selling by individuals
taking losses and involuntary investor selling in the form of margin calls.
Historically when investors have been forced to sell their holdings regardless
of the attractiveness of the stocks in their portfolio, it always seems to be
the final impetus behind the formation of an important market bottom. In
addition, while the economy is certainly slowing, per the Federal Reserve's
desires and orchestration, it is worth noting that it is from a very fast pace.
The potential still exists for the economy to continue to grow, but at a slower
and much healthier pace. Projections for earnings growth for 2001 for the
overall market vary widely. Many economists forecast earnings to grow in the
3.0% to 10.5% range, a much slower pace from 1999 and early 2000. As a
comparison, earnings have grown at an average rate of 7.5% since World War II
and at an average rate of 8.1% during the 1990s. Pardon the old adage, but it is
important to realize that things are different today, in that the recent
breakthroughs in technology have been revolutionary and have changed the way
companies do business. Today we are significantly more efficient than we were
even a decade ago. These breakthroughs should help keep inflation low and allow
for the potential for a profitable landscape for those companies that take
advantage of the opportunities provided. For those that resist change or are
slow to adapt, they will fall to the wayside much quicker than they would have
in past years. As with all periods of revolutionary change marked by substantial
technological breakthroughs, a price is paid on the journey to better times, as
with this excitement come pockets of "growing pains" where shakeouts occur in
both the fixed-income and equity markets. It appears that we have been in one of
those periods since March 2000.
A perfect illustration of this point has been the developments, concerns, and
negative equity returns generated by the telecommunications industry during
2000, an industry in which the Fund does have exposure. Telecommunications has
been an exciting area over the last few years. It has been one marked by
consolidation, explosion in growth, and very favorable equity returns through
the better part of the first quarter of 2000. Similar to many areas in which
Wall Street is involved, the excitement for the industry turned euphoric and
many companies with less-than-stellar track records and flawed business plans
(such as ICG Telecommunications, RSL Communications, and GST Telecommunications,
all now bankrupt or on the verge of bankruptcy) received funding from the
capital markets; a huge quantity of secondary offerings took place, further
pulling money into the group; IPOs for third-, fourth-, and fifth-tier players
occurred; and many telecommunications sector funds were spawned. The downside?
These events marked the end of the extreme optimism for the group and turned
telecom stocks into a tailspin as market participants watched as their share
prices fell precipitously. The majority of the huge amounts of money plowed into
the industry by fund/portfolio managers, investors, and shareholders sits at a
loss. As a result, tax loss selling was heavy in September and October and will
probably remain that way through the end of the year, further pressuring share
prices.
Although concerns have been raised about some fundamental issues such as too
much capacity being laid in the ground in fiber optics, a lack of spectrum in
the wireless industry, and a lack of funding, the basic arguments for huge
growth and much potential still exists for those telecom players that are
well-positioned, prepared, and are adequately funded. Several unique niche
companies such as Western Wireless, Broadwing, Telephone & Data Systems, Dobson
Communications, and Nextel Partners, should emerge as much stronger entities
after this painful period plays out, as many are able to pick off weaker
operators with strong or complementary assets at very favorable and sometimes
even cheap prices. Despite the downturn in share prices for many of our telecom
holdings, in some cases their fundamentals have actually improved since the
start of the year and their intrinsic value has risen. For example, Nextel
Partners, Dobson Communications, and Western Wireless all possess assets which
are scarce and becoming increasingly valuable. That asset is spectrum and it is
an asset that most of the larger wireless communications companies must acquire
in order to compete and to survive. Society's needs for telecommunication
services has not diminished or declined. Personal cellular use is on the rise.
Devices such as Palm Pilots, wireless handsets, and other personal communication
devices have quickly moved from voice to data transmission. In addition, demand
for DSLs and Internet access is still high. The long-term outlook is very bright
as these tools become part of the mainstream of our society and other
technological aids become embraced. While we are certainly going through a
painful, but unfortunately necessary weeding out period, we believe we are
nearer to a positive resolution and that the inherent value in our holdings will
eventually be unlocked and realized by the market.
Finally, another reason for optimism over the intermediate-term lies in our
outlook for monetary policy. Although the labor market remains tight, most
inflationary measures remain well behaved. In addition, developments around the
world could hold promise on the inflationary front for the United States.
Competition from Europe, which is hungry to grow but facing slow growth at home,
may become more intense in many areas. Even where the U.S. may have a quality
advantage, lower prices for similar quality goods may put downward pressure on
prices. Moreover, for U.S. inflation, this is good news. If these trends were to
continue, the Fed should have room to lower rates in early- to mid-2001, an
event which would be well-received by both the equity and fixed-income markets.
With this said, there are some dark clouds on the horizon in the form of a
negatively charged U.S. political environment, high oil and gas prices,
continued violence and an unclear future in the Middle East, tight labor
markets, and the risk of the U.S. economy slowing too quickly and by too much.
We believe that in this type of environment, individual stock selection will
continue to be extremely important. Returns will probably be more difficult to
generate as has been the case in many past years, but we do see many attractive
individual opportunities out there and will continue to try and exploit them for
the benefit of our shareholders.
In addition, we are pleased to report a significant milestone has been achieved
for the Fund. Shortly, Fountainhead Kaleidoscope Fund will be assigned a ticker
symbol. The new ticker symbol will be KALEX. This milestone is significant for
our shareholders, as it will become easier to get information on the Fund. As
always, information is available on our website at www.kingadvisors.com. The
Fund's NAV is updated and posted daily. In addition, the Fund's top 5 holdings,
top 5 industry weightings, asset level, and total returns are updated on a
quarterly basis. The prospectus and shareholder reports are also available for
viewing.
Thank you for your support of Fountainhead Kaleidoscope Fund during our first
fiscal year.
Sincerely,
Roger E. King
Chairman and President
<PAGE>
Fountainhead Kaleidoscope Fund
Schedule of Investments - October 31, 2000
<TABLE>
<S> <C> <C>
Common Stocks - 98.4% Shares Value
Biological Products (No Diagnostic Substances) - 3.2%
BioChem Pharma, Inc. (a) 3,500 $ 86,625
----------------
Bottled & Canned Soft Drinks & Carbonated Waters - 2.9%
Whitman Corp. 6,000 78,000
-----------------
Cable & Other Pay Television Services - 14.7%
Adelphia Communications Corp. - Class A (a) 2,450 81,309
Charter Communications, Inc. (a) 6,000 117,000
PrimaCom AG (a) (c) 12,900 122,550
UnitedGlobalCom, Inc. (a) 2,500 79,531
-----------------
400,390
-----------------
Calculating & Accounting Machines (No Electronic Computers) - 2.9%
Diebold, Inc. 3,000 78,000
-----------------
Commercial Banks & Trusts - 3.8%
Golden State Bancorp, Inc. 4,000 104,500
-----------------
Electromedical & Electrotherapeutic Apparatus - 4.6%
St. Jude Medical, Inc. (a) 2,300 126,500
-----------------
Miscellaneous Chemical Products - 3.1%
Great Lakes Chemical Corp. 2,500 83,438
-----------------
Mortgage Bankers & Loan Correspondents - 1.5%
Countrywide Credit Industries, Inc. 1,100 41,181
-----------------
Natural Gas Transmission & Distribution - 2.5%
Southwest Gas Corp. 3,300 68,887
-----------------
Office Machines - 2.6%
Bell & Howell Co. (a) 3,800 72,200
-----------------
Periodicals: Publishing, or Publishing & Printing - 3.1%
Meredith Corp. 2,700 85,725
-----------------
Fountainhead Kaleidoscope Fund
Schedule of Investments - October 31, 2000 - continued
Common Stocks - continued Shares Value
Pharmaceutical Preparations - 12.2%
Dura Pharmaceuticals, Inc. (a) 4,500 $ 154,969
King Pharmaceuticals, Inc. (a) 3,000 134,438
Watson Pharmaceuticals, Inc. (a) 700 43,794
-----------------
333,201
-----------------
Radio Broadcasting Stations - 2.8%
Paxson Communications Corp. - Class A (a) 6,600 75,075
-----------------
Radio Telephone Communications - 11.9%
Dobson Communications Corp. (a) 12,000 156,000
Nextel Partners, Inc. (a) 3,800 93,100
Western Wireless Corp. - Class A (a) 1,600 76,000
-----------------
325,100
-----------------
Security Brokers, Dealers & Flotation Companies - 6.7%
LaBranche & Co, Inc. (a) 4,600 182,275
-----------------
Services - Advertising - 3.2%
Ackerley Group, Inc. 8,400 87,150
-----------------
Services - Auto Rental & Leasing (No Drivers) - 2.7%
Dollar Thrifty Automotive Group, Inc. (a) 4,800 73,800
-----------------
Services - Consumer Credit Reporting, Collection Agencies - 1.6%
Equifax, Inc. 1,300 44,850
-----------------
Surgical & Medical Instruments & Apparatus - 2.6%
Boston Scientific Corp. (a) 4,500 71,719
-----------------
Telephone Communications (No Radio Telephone) - 8.5%
Broadwing, Inc. (a) 943 26,640
Telephone & Data Systems, Inc. 800 84,400
Viatel, Inc. (a) 12,500 120,312
-----------------
231,352
-----------------
Television Broadcasting Stations - 1.3%
Granite Broadcasting Corp. (a) 11,000 34,375
-----------------
TOTAL COMMON STOCKS (Cost $2,429,816) $ 2,684,343
-----------------
Fountainhead Kaleidoscope Fund
Schedule of Investments - October 31, 2000 - continued
Principal
Amount Value
Money Market Securities - 0.6%
Firstar Treasury Fund, 5.54% (b) (Cost $15,774) 15,774 $ 15,774
-----------------
TOTAL INVESTMENTS - 99.0% (Cost $2,445,590) 2,700,117
-----------------
Other Assets less Liabilities - 1.0% 27,509
-----------------
Total Net Assets - 100.0% $ 2,727,626
=================
(a) Non-income producing
(b) Variable rate security; the coupon rate shown represents the rate at October
31, 2000.
(c) American Depository Receipt
</TABLE>
<PAGE>
Fountainhead Kaleidoscope Fund October 31, 2000
Statement of Assets & Liabilities
<TABLE>
<S> <C> <C>
Assets
Investment in securities, at value (Cost $2,445,590) $ 2,700,117
Cash 610
Receivable for investment sold 248,698
Interest receivable 68
-----------------
Total assets 2,949,493
Liabilities
Accrued investment advisory fee payable $ 2,677
Payable for securities purchased 219,190
-----------------
Total liabilities 221,867
-----------------
Net Assets $ 2,727,626
=================
Net Assets consist of:
Paid in capital $ 2,474,114
Accumulated net realized loss on investments (1,015)
Net unrealized appreciation on investments 254,527
-----------------
Net Assets, for 188,306 shares $ 2,727,626
=================
Net Asset Value
Net Assets
Offering price and redemption price per share ($ 2,727,626 / 188,306) $ 14.49
=================
</TABLE>
See accompanying notes which are an integral part of the financial statements.
<PAGE>
Fountainhead Kaleidoscope Fund
Statement of Operations for the year ended October 31, 2000
<TABLE>
<S> <C> <C>
Investment Income
Dividend income $ 6,653
Interest income 6,368
----------------
Total Income 13,021
Expenses
Investment advisory fee $ 30,115
Trustees' fees 1,843
---------------
Total expenses before waivers and reimbursements 31,958
Waived fees and reimbursed expenses (10,447)
---------------
Total operating expenses 21,511
----------------
Net Investment Loss (8,490)
----------------
Realized & Unrealized Gain (Loss)
Net realized loss on investment securities (1,015)
Change in net unrealized appreciation (depreciation)
on investment securities 254,527
---------------
Net gain on investment securities 253,512
----------------
Net increase in net assets resulting from operations $ 245,022
================
</TABLE>
See accompanying notes which are an integral part of the financial statements.
<PAGE>
Fountainhead Kaleidoscope Fund
Statement of Changes in Net Assets
Year ended
October 31, 2000
--------------------
Increase/(Decrease) in Net Assets
Operations
Net investment loss $ (8,490)
Net realized loss on investment securities (1,015)
Change in net unrealized
appreciation (depreciation) 254,527
--------------------
Net increase in net assets
resulting from operations 245,022
--------------------
Distributions to shareholders
From net investment income 0
From net realized gain 0
--------------------
Total distributions 0
--------------------
Share Transactions
Net proceeds from sale of shares 2,508,109
Shares issued in reinvestment
of distributions 0
Shares redeemed (25,505)
--------------------
Net increase in net assets resulting
from share transactions 2,482,604
--------------------
Total increase in net assets 2,727,626
Net Assets
Beginning of period 0
--------------------
End of period [including accumulated
undistributed net investment income of $0] $ 2,727,626
====================
See accompaning notes which are an integral part of the financial statements.
<PAGE>
Fountainhead Kaleidoscope Fund
Financial Highlights for the year ended October 31, 2000
Selected Per Share Data
Net asset value, beginning of period $ 10.00
------------------
Income from investment operations
Net investment loss (0.07)
Net realized and unrealized gain (loss) 4.56
------------------
Total from investment operations 4.49
------------------
Less Distributions
From net investment income 0.00
From net realized gain 0.00
------------------
Total distributions 0.00
------------------
Net asset value, end of period $ 14.49
==================
Total Return 44.90%
Ratios and Supplemental Data
Net assets, end of period (000) $2,728
Ratio of expenses to average net assets 1.25%
Ratio of expenses to average net assets
before fee waivers and reimbursement 1.86%
Ratio of net investment loss to average
net assets (0.49)%
Ratio of net investment loss to average
net assets before fee waivers and
reimbursement (1.10)%
Portfolio turnover rate 195.96%
See accompanying notes which are an integral part of the financial statements.
<PAGE>
Fountainhead Kaleidoscope Fund
Notes To Financial Statements
October 31, 2000
NOTE 1. ORGANIZATION
The Fountainhead Kaleidoscope Fund (the "Fund") was organized as a series
of the AmeriPrime Funds, an Ohio business trust (the "Trust"), on September 29,
1999 and commenced operations on November 1, 1999. The Fund is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment objective is to provide
long-term capital growth. The Declaration of Trust Agreement for the Fund
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
the Fund in the preparation of its financial statements.
Securities Valuation - Securities, which are traded on any exchange or on
the NASDAQ over-the-counter market, are valued at the last-quoted sale price.
Lacking a last sale price, a security is valued at its last bid price except
when, in the opinion of the Advisor (as such term is defined in note 3 of this
document), the last bid price does not accurately reflect the current value of
the security. All other securities for which over-the-counter market quotations
are readily available are valued at their last bid price. When market quotations
are not readily available, when the Advisor determines the last bid price does
not accurately reflect the current value, or when restricted securities are
being valued, such securities are valued as determined in good faith by the
Advisor, in conformity with guidelines adopted by and subject to review of the
Board.
Fixed-income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Advisor believes such prices accurately reflect the fair market values of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, 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 by the Board. Short-term investments in fixed-income
securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the
amortized-cost method of valuation, which the Board has determined will
represent fair value.
Federal Income Taxes - The Fund intends to qualify each year as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended. By so qualifying, the Fund will not be subject to federal income taxes
to the extent that it distributes substantially all its net investment income
and any realized capital gains.
Dividends and Distributions - The Fund intends to comply with federal tax
rules regarding distribution of substantially all its net investment income and
capital gains. These rules may cause multiple distributions during the course of
the year.
Redemption Fees - The Fund charges a redemption fee of 1% of the current
net asset value of shares redeemed if the shares are owned less than 180 days.
The fee is charged for the benefit of remaining
Fountainhead Kaleidoscope Fund
Notes To Financial Statements
October 31, 2000 - continued
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued
shareholders to defray Fund portfolio transaction expenses and facilitate
portfolio management. This fee applies to shares being redeemed in the order in
which they are purchased. The fee, which is retained by the Fund, is accounted
for as an addition to paid-in capital.
Other- The Fund follows industry practice and records security transactions
on the trade date. The specific identification method is used for determining
gains or losses for financial statements and income tax purposes. Dividend
income is recorded on the ex-dividend date and interest income is recorded on an
accrual basis. Discounts and premiums on securities purchased are amortized over
the life of the respective securities. Generally accepted accounting principals
require that permanent financial reporting tax differences relating to
shareholder distributions be reclassified to paid-in capital.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains King Investment Advisors, Inc., 1980 Post Oak Boulevard,
Suite 2400, Houston, Texas 77056-3898 (the "Advisor") to manage the Fund's
investments. Roger E. King, President of the Advisor, is primarily responsible
for the day-to-day management of the Fund's portfolio.
Under the terms of the management agreement (the "Agreement"), the Advisor
manages the Fund's investments subject to approval of the Board of Trustees 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 the Fund's expenses, the Fund is obligated to pay the Advisor a
fee computed and accrued daily and paid monthly at an annual rate of 1.75% of
the average daily net assets of the Fund. For the year ended October 31, 2000,
the Advisor earned a fee of $30,115 from the Fund. The Advisor contractually
agreed to waive fees by 0.50% of the average daily net assets of the Fund
through February 28, 2001. For the year ended October 31, 2000, the Advisor
waived fees of $8,604. In addition, the Advisor has agreed to reimburse expenses
for the Fund to the extent necessary to maintain total operating expenses at the
rate of 1.25%. For the year ended October 31, 2000, the Advisor reimbursed
expenses of $1,843. There is no assurance that such an arrangement will continue
in the future.
Effective October 12, 2000, AmeriPrime Financial Services, Inc. and Unified
Fund Services, Inc., both wholly owned subsidiaries of Unified Financial
Services, Inc., merged with one another. Prior to the merger, Ameriprime
Financial Services, Inc. served as the administrator for the Fund. Prior to the
merger, AmeriPrime Financial Services, Inc. served as Administrator to the Fund.
The result of this merger is now Unified Fund Services, Inc., still a wholly
owned subsidiary of Unified Financial Services, Inc.
The Fund retains Unified Fund Services, Inc., a wholly owned subsidiary of
Unified Financial Services, Inc., to manage the Fund's business affairs and
provide the Fund with administrative, transfer agency, and fund accounting
services, including all regulatory reporting and necessary office equipment and
personnel. The Advisor paid all administrative, transfer agency, and fund
accounting fees on behalf of the Fund per the management agreement. 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 the Fund's shares. There were no payments made to the Distributor
for the year ended October 31, 2000. Certain members of management of Unified
Fund Services, Inc. and the Distributor are also directors and/or officers of
the Trust.
Fountainhead Kaleidoscope Fund
Notes To Financial Statements
October 31, 2000 - continued
NOTE 4. SHARE TRANSACTIONS
As of October 31, 2000, the Fund had an unlimited number of authorized
shares. Paid-in capital at October 31, 2000 was $2,474,114.
Transactions in shares were as follows:
Year ended
October 31, 2000
Shares Dollars
Shares sold 190,041 $2,508,109
Shares issued in
reinvestment of
distributions 0 0
Shares redeemed (1,735) (25,505)
-------- ------------
188,306 $2,482,604
======== ============
NOTE 5. INVESTMENTS
For the year ended October 31, 2000, purchases and sales of investment
securities, other than short-term investments, totaled $5,536,737 and
$3,105,906, respectively. The gross unrealized appreciation for all securities
totaled $464,296 and the gross unrealized depreciation for all securities
totaled $209,769 for a net unrealized appreciation of $254,527. The total cost
of securities for federal income tax purposes at October 31, 2000 was
$2,445,590.
NOTE 6. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 7. RELATED PARTY TRANSACTIONS
The Advisor is not a registered broker-dealer of securities and thus does
not receive commissions on trades made on behalf of the Fund. The beneficial
ownership, either directly or indirectly, of more than 25% of the voting
securities of the Fund creates a presumption of control of the Fund, under
Section 2(a)(9) of the Investment Company Act of 1940. As of October 31, 2000,
Roger E. King owned of record, in aggregate, 26% of the Fund.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Trustees
Fountainhead Kaleidoscope Fund
We have audited the accompanying statement of assets and liabilities of the
Fountainhead Kaleidoscope Fund, including the schedule of portfolio investments
as of October 31, 2000, and the related statement of operations, the statement
of changes in net assets, and financial highlights for the period from November
1, 1999 (commencement of operations) to October 31, 2000 in the period then
ended. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held as
of October 31, 2000 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fountainhead Kaleidoscope Fund as of October 31, 2000, the results of its
operations, the changes in its net assets, and the financial highlights for the
period from November 1, 1999 (commencement of operations) to October 31, 2000 in
the period then ended, in conformity with generally accepted accounting
principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
November 19, 2000
<PAGE>
Fountainhead Special Value Fund Annual Report
October 31, 2000 marked the end of Fountainhead Special Value Fund's (KINGX)
fourth fiscal year. After an outstanding 1999, the year of 2000 has proven to be
a difficult one. Thanks to a strong start during our most recent year, the Fund
was able to outperform its comparable benchmarks, returning 23.4% for the
one-year period ended 10/31/00, while the Russell Midcap Index returned 23.7%,
the Russell 2000 returned 17.4%, and the S&P 500 Index returned 6.8% over the
same time period. Since inception, the Fund continued to handily outperform its
benchmarks, turning in a compound annual return of 31.4% versus 17.5% for the
Russell Midcap, 10.0% for the Russell 2000, and 19.7% for the S&P 500.
Returns for the Year Ended October 31, 2000
------------------------------------------------------------------------------
Fund/Index 1 Year Average Annual Return
Since Inception
December 31, 1996
------------------------------------------------------------------------------
Fountainhead Special Value 23.4% 31.4%
Fund
------------------------------------------------------------------------------
S&P 500 Index 6.8% 19.7%
Russell 2000 Index 17.4% 10.0%
Russell Midcap Index 23.7% 17.5%
------------------------------------------------------------------------------
Fountainhead Special Russell 2000 Russell Midcap
Value Fund - $28,462 Index - $14,400 Index - $18,563
12/96 $10,000 $10,000 $10,000
1/97 $10,420 $10,200 $10,374
4/97 $9,860 $9,509 $10,165
7/97 $11,990 $11,533 $12,203
10/97 $13,370 $12,105 $12,263
1/98 $13,433 $12,043 $12,659
4/98 $16,476 $13,540 $14,332
7/98 $15,424 $11,798 $13,409
10/98 $12,481 $10,669 $12,810
1/99 $13,967 $12,088 $14,181
4/99 $16,534 $12,296 $15,182
7/99 $19,008 $12,683 $15,242
10/99 $23,100 $12,266 $15,003
1/00 $29,384 $14,237 $16,237
4/00 $27,511 $14,561 $17,611
7/00 $26,026 $14,428 $17,454
10/00 $28,462 $14,400 $18,563
The chart shows the value of a hypothetical initial investment of $10,000 in the
Fund, the Russell MidCap Index, and the Russell 2000 Index on December 31, 1996
and held through October 31, 2000. The Russell MidCap Index and the Russell 2000
Index are widely recognized, unmanaged indices of common stock prices.
Performance figures include the change in value of the stocks in the indices and
the reinvestment of dividends; they are not annualized. The index returns do not
reflect expenses, which have been deducted from the Fund's return. The Fund's
return represents past performance and is not predictive of future results.
During the Fund's most recent fiscal year, the market environment was very
favorable from November 1999 through early spring 2000. The financial markets
took a turn for the worse in March 2000, and since then they have traded in a
volatile and generally downward trend. Despite a less-than-favorable
environment, we were able to successfully uncover some diamonds in the rough,
whose values were eventually recognized by the market. VoiceStream Wireless and
Dura Pharmaceuticals entered into agreements to be acquired during the year,
appreciating 60% and 184%, respectively. In addition to these stocks, the Fund
was helped by our healthcare holdings (St. Jude Medical +97% for the one-year
ended 10/31/00, Watson Pharmaceuticals +85%, Beckman Coulter +47%, Elan Corp
+66%, and King Pharmaceuticals +40%), our financial issues (Countrywide Credit
Industries +52%, LaBranche +32%, and Golden State Bancorp +25%), a few
media/broadcasting stocks (Gemstar International Group +70%), select local
exchange telecom carriers (CenturyTel +47% and Broadwing +36%), and some special
situations (Equifax +36% and Charter Communications +41%).
The Fund's results were hampered by some of our telecommunications holdings
(Viatel, Global Crossing, Intermedia Communications, WinStar Communications,
Net2Phone, and Flag Telecom) and by certain of our cable and technology
positions (PrimaCom AG, UnitedGlobalCom, EarthLink, ACTV, Granite Broadcasting,
Adelphia Communications, and Siliconix). Some of these positions have been
eliminated where the fundamentals appear less promising. Those that have been
retained offer, in our opinion, good potential for recovery.
Going forward, we believe that the macro environment may continue to be
difficult over the intermediate-term, as the economy slows and the credit
markets continue to be constrained. However, the longer-term picture appears to
be an optimistic one. Although painful to many, the recent pullback in share
prices has been positive for several reasons, but two in particular. First, much
of the speculative froth has been flushed out of the stock market as
Internet-related start-ups with no credible business plans have been decimated.
In addition, many so-called "safe", quality high P/E growth stocks such as
Nortel (-55% from its 52-week high), Home Depot (-44%), Circuit City (-80%),
Intel (-47%), Cisco (-36%), Oracle (-41%), Microsoft (-43%), Dell (-58%), and
Lucent (-70%), descended to earth as their valuation levels began to compress
and as investors began reevaluating the multiples they wanted to pay for these
former large-cap growth darlings.
The positive implication of these developments is that as capital does flow back
into the equity markets, it should go to viable, "real" companies which have
more realistic valuations. This, in turn, should lead to a more rational and
healthy market. In addition, this should have positive economic implications as
capital should be allocated to more productive and efficient areas of the
economy which have true viability, not those companies which receive major
inflows of money only to cease to exist after 18 to 24 months.
Most investors have heard the phrase "return to the mean." This terminology,
used constantly in recent years, contrasts the high double-digits returns that
have been generated over the last few years as evidenced by the major
cap-weighted equity indices, such as the S&P 500 or the Dow Jones Industrial
Average, with historical norms. However, rather than being just a theoretical
issue, it now appears likely that the major indices may be returning to their
long-term average returns of 10% to 12%, and that the days of "easy money" may
well be gone. With that said, the implications of this possibility are not all
that negative, as the last several quarters bear striking similarities to the
1972 through 1974 period when the broader market declined substantially in 1972
and 1973, but the major indices did not reflect the anguish until 1973 and 1974,
after the Nifty Fifty finally broke down. As was the case during that prior time
period, the broader market in recent times started its decline in the spring of
1998 and continued through 1999; despite the pain felt by the majority of market
participants, the S&P 500 and NASDAQ Composite all posted high double-digit
returns during that time frame. Although higher returns were posted by the major
averages, they were not reflective of a healthy market. After removing a handful
of the largest tech stocks (which because of their large market caps, have
returns which impact the indices by a larger degree than the smaller
counterparts--often distorting returns), the indices moved into negative
territory. This skewed result essentially masked the difficulties borne by
approximately 80% to 90% of stock prices during 1998 and the first part of 1999.
Just as in the 1973 - 1974 period, the major indices turned into negative
territory this year, although many industry groups of the broader market (such
as healthcare, financials, and energy) were generally rising. Although it is
unlikely that the downturn will be as severe or as long-lasting as the early
`70s, the similarities of the timing are interesting. And indeed, we may be
closer to the proverbial light at the end of the tunnel.
Going forward, there are several reasons why the worst may actually be behind us
and the equity markets should begin to stabilize and produce modest positive
results over the next year or so. During the months of September and October,
many mutual funds were heavy sellers as they took losses to offset capital gains
realized earlier in the year. During this same time period, and continuing on
into the end of the calendar year, there have been both heavy selling by
individuals taking losses and involuntary investor selling in the form of margin
calls. Historically when investors have been forced to sell their holdings
regardless of the attractiveness of the stocks in their portfolio, it always
seems to be the final impetus behind the formation of an important market
bottom. In addition, while the economy is certainly slowing, per the Federal
Reserve's desires and orchestration, it is worth noting that it is from a very
fast pace. The potential still exists for the economy to continue to grow, but
at a slower and much healthier pace. Projections for earnings growth for 2001
for the overall market vary widely. Most economists forecast earnings to grow in
the 9.0% to 13.5% range, a slower pace from 1999 and early 2000, but a far cry
from one that is anemic or recessionary. As a comparison, earnings have grown at
an average rate of 7.5% since World War II and at an average rate of 8.1% during
the 1990s. Pardon the old adage, but it is important to realize that things are
different today, in that the recent breakthroughs in technology have been
revolutionary and have changed the way companies do business. Today we are
significantly more efficient than we were even a decade ago. These breakthroughs
should help keep inflation low and allow for the potential for a profitable
landscape for those companies that take advantage of the opportunities provided.
For those which resist change or are slow to adapt, they will fall to the
wayside much quicker than they would have in past years. As with all periods of
revolutionary change marked by substantial technological breakthroughs, a price
is paid on the journey to better times, as with this excitement come pockets of
"growing pains" where shakeouts occur in both the fixed-income and equity
markets. It appears that we have been in one of those periods since March 2000.
A perfect illustration of this point has been the developments, concerns, and
negative equity returns generated by the telecommunications industry during
2000, an industry in which the Fund does have exposure. Telecommunications has
been an exciting area over the last few years. It has been one marked by
consolidation, explosion in growth, and very favorable equity returns through
the better part of the first quarter of 2000. Similar to many areas in which
Wall Street is involved, the excitement for the industry turned euphoric and
many companies with less-than-stellar track records and flawed business plans
(such as ICG Telecommunications, RSL Communications, and GST Telecommunications,
all now bankrupt or on the verge of bankruptcy) received funding from the
capital markets; a huge quantity of secondary offerings took place, further
pulling money into the group; IPOs for third-, fourth-, and fifth-tier players
occurred; and many telecommunications sector funds were spawned. The downside?
These events marked the end of the extreme optimism for the group and turned
telecom stocks into a tailspin as market participants watched as their share
prices fell precipitously. The majority of the huge amounts of money plowed into
the industry by fund/portfolio managers, investors, and shareholders all sits at
a loss. As a result, tax loss selling was heavy in September and October and
will probably remain that way through the end of the year, further pressuring
share prices.
Although concerns have been raised about some fundamental issues such as too
much capacity being laid in the ground in fiber optics, a lack of spectrum in
the wireless industry, and a lack of funding, the basic arguments for huge
growth and much potential still exists for those telecom players that are
well-positioned, prepared, and are adequately funded. Several unique niche
companies such as Global Crossing, WinStar, Western Wireless, Rural Cellular,
and Nextel Communications, should emerge as much stronger entities after this
painful period plays out, as many are able to pick off weaker operators with
strong or complementary assets at very favorable and sometimes even cheap
prices. Despite the downturn in share prices for many of our telecom holdings,
in some cases their fundamentals have actually improved since the start of the
year and their intrinsic value has risen. Global Crossing, for example, recently
raised expectations for the year, as the company expects cash flow and EBITDA
growth to be above analysts' expectations. In addition, the Company is fully
funded until it projects to turn cash flow positive, sometime in 2002. WinStar
Communications, a unique competitive local exchange carrier (CLEC), also
recently reported better-than-expected results. It too announced its funding
status was in excellent shape as a consortium led by Microsoft, Compaq Computer,
Nortel and others injected $200 million into the company. Management believes
that this is more than enough to carry the company through until it turns
profitable (on a cash flow basis). Finally, Rural Cellular, Nextel
Communication, and Western Wireless all possess assets which are scarce and
becoming increasingly valuable. That asset is spectrum and it is an asset that
most of the larger wireless communications companies must acquire in order to
compete and to survive. Society's needs for telecommunication services has not
diminished or declined. Personal cellular use is on the rise. Devices such as
Palm Pilots, wireless handsets, and other personal communication devices have
quickly moved from voice to data transmission. In addition, demand for DSLs and
Internet access is still high. The long-term outlook is very bright as these
tools become part of the mainstream of our society and other technological aids
become embraced. While we are certainly going through a painful, but
unfortunately necessary weeding out period, we believe we are nearer to a
positive resolution and that the inherent value in our holdings will eventually
be unlocked and realized by the market.
Finally, another reason for optimism over the intermediate-term lies in our
outlook for monetary policy. Although the labor market remains tight, most
inflationary measures remain well-behaved. In addition, developments around the
world could hold promise on the inflationary front for the United States.
Competition from Europe, which is hungry to grow but facing slow growth at home,
may become more intense in many areas. Even where the U.S. may have a quality
advantage, lower prices for similar quality goods may put downward pressure on
prices. And for U.S. inflation, this is good news. If these trends were to
continue, the Fed should have room to lower rates in early- to mid-2001, an
event which would be well-received by both the equity and fixed-income markets.
With this said, there are some dark clouds on the horizon in the form of a
negatively charged U.S. political environment, high oil and gas prices,
continued violence and an unclear future in the Middle East, tight labor
markets, and the risk of the U.S. economy slowing too quickly and by too much.
We believe that in this type of environment, individual stock selection will
continue to be extremely important. Returns will probably be more difficult to
generate as has been the case in many past years, but we do see many attractive
individual opportunities out there and will continue to try and exploit them for
the benefit of our shareholders.
In addition, we are pleased to report a significant milestone has been achieved
for the Fund. The Fund's NAV will now be listed in many newspapers. The listing
will appear under the abbreviation "FountnhdSpV". As always, information on the
Fund is also available on our website at www.kingadvisors.com. The Fund's NAV is
updated and posted daily. In addition, the Fund's top 5 holdings, top 5 industry
weightings, asset level, and total returns are updated on a quarterly basis. The
prospectus and shareholder reports are also available for viewing.
Thank you for your continued support of the Fountainhead Special Value Fund.
Sincerely,
Roger E. King
Chairman and President
<PAGE>
Fountainhead Special Value Fund
Schedule of Investments - October 31, 2000
<TABLE>
<S> <C> <C>
Common Stocks - 100.1% Shares Value
Cable and Other Pay Television Services - 17.1%
Adelphia Communication Corp. - Class A (a) 41,228 $ 1,368,254
Cablevision Systems Corp. - Class A (a) 15,000 1,117,500
Charter Communications, Inc. - Class A (a) 51,000 994,500
PrimaCom AG (a) (c) 4,500 42,750
UnitedGlobalCom, Inc. (a) 23,000 731,687
---------------
4,254,691
---------------
Laboratory Analytical Instruments - 0.7%
Beckman Coulter, Inc. 2,400 168,150
---------------
Miscellaneous Chemical Products - 3.1%
Great Lakes Chemical Corp. 23,000 767,625
---------------
Pharmaceuticals - 15.9%
Biochem Pharma, Inc. (a) 31,000 767,250
Dura Pharmaceuticals, Inc. (a) 51,000 1,756,313
King Pharmaceuticals, Inc. (a) 20,000 896,250
Watson Pharmaceuticals, Inc. (a) 8,900 556,806
---------------
3,976,619
---------------
Radio and TV Broadcasting & Communications Equipment - 1.4%
ACTV, Inc. (a) 36,100 355,361
---------------
Savings and Loans - 3.0%
Golden State Bancorp, Inc. 28,800 752,400
---------------
Security Brokers, Dealers - 4.1%
LaBranche & Co., Inc. (a) 25,600 1,014,400
---------------
Services - advertising - 2.6%
Ackerley Group, Inc. 62,000 643,250
---------------
Services - Consumer Credit Reporting Collection Agencies - 1.7%
Equifax, Inc. 12,000 414,000
---------------
Surgical/Medical Instruments - 4.5%
Boston Scientific Corp. (a) 43,000 685,312
St. Jude Medical, Inc. 8,200 451,000
---------------
1,136,312
---------------
Technology - Electronic Components - 1.4%
Diebold, Inc. 13,700 356,200
---------------
Fountainhead Special Value Fund
Schedule of Investments - October 31, 2000 - continued
Common Stocks - continued Shares Value
Telephone Communications (No Radiotelephone) - 22.9%
Broadwing, Inc. (a) 36,300 $ 1,025,475
CenturyTel, Inc. 23,000 885,500
Global Crossing Ltd. (a) 27,290 644,726
Telephone & Data Systems, Inc. 8,300 875,650
Viatel Inc. (a) 177,600 1,709,400
WinStar Communications, Inc. (a) 29,500 575,250
---------------
5,716,001
---------------
Television Broadcasting Stations - 0.1%
Granite Broadcasting Group, Inc. (a) 6,000 18,750
---------------
Wireless Communications - 21.6%
Dobson Communications Corp. (a) 100,000 1,300,000
NEXTEL Communications, Inc. - Class A (a) 12,200 468,938
NEXTEL Partners, Inc. - Class A (a) 31,200 764,400
Voicestream Wireless Corp. (a) 12,775 1,679,913
Western Wireless Corp. - Class A (a) 24,600 1,168,500
---------------
5,381,751
---------------
TOTAL COMMON STOCKS 24,955,510
---------------
TOTAL INVESTMENTS - 100.1% (Cost $19,289,217) 24,955,510
---------------
Other assets less liabilities - (0.1)% (34,786)
---------------
Total Net Assets - 100.0% $ 24,920,724
===============
(a) Non-income producing
(b) Variable rate security; the coupon rate shown represents the rate at October
31, 2000.
(c) American Depository receipt
</TABLE>
See accompanying notes which are an integral part of the financial statements.
<PAGE>
Fountainhead Special Value Fund October 31, 2000
Statement of Assets & Liabilities
<TABLE>
<S> <C> <C>
Assets
Investment in securities, at value (Cost $19,289,217) $ 24,955,510
Receivable for investment sold 600,162
Dividend receivable 408
Interest receivable 3,316
-------------------
Total assets 25,559,396
Liabilities
Accrued investment advisory fee $ 44,421
Payable to custodian bank 578,801
Other payables and accrued expenses 15,450
----------------
Total liabilities 638,672
-------------------
Net Assets $ 24,920,724
===================
Net Assets consist of:
Paid in capital $ 16,601,316
Accumulated undistributed net realized gain on investments 2,653,115
Net unrealized appreciation on investments 5,666,293
-------------------
Net Assets, for 916,034 shares $ 24,920,724
===================
Net Asset Value
Net Assets
Offering price and redemption price per share ($24,920,724/916,034) $ 27.21
===================
</TABLE>
See accompanying notes which are integral part of the financial statements.
<PAGE>
Fountainhead Special Value Fund
Statement of Operations for the year ended October 31, 2000
<TABLE>
<S> <C> <C>
Investment Income
Dividend income $ 33,125
Interest income 22,973
-----------------
Total Income 56,098
Expenses
Investment advisory fee $ 296,201
Administration fees 30,000
Audit fees 7,917
Custodian fees 10,289
Insurance fees 8,426
Legal fees 1,725
Pricing & bookkeeping fees 24,500
Registration fees 12,743
Shareholder reports 9,198
Transfer agent fees 15,972
Trustees' fees 2,814
Miscellanoues expenses 590
----------------
Total expenses before waivers and reimbursements 420,375
Waived fees and reimbursed expenses (125,396)
----------------
Total operating expenses 294,979
-----------------
Net Investment Loss (238,881)
-----------------
Realized & Unrealized Gain (Loss)
Net realized gain on investment securities 2,763,544
Change in net unrealized appreciation
on investment securities 841,203
---------------
Net realized & unrealized gain on investment securities 3,604,747
-----------------
Net increase in net assets resulting from operations $ 3,365,866
=================
</TABLE>
<PAGE>
Fountainhead Special Value Fund
Statement of Changes in Net Assets
<TABLE>
<S> <C> <C>
For the For the
Year ended Year ended
October 31, 2000 October 31, 1999
------------------ -------------------
Increase/(Decrease) in Net Assets
Operations
Net investment loss $ (238,881) $ (85,772)
Net realized gain on investment securities 2,763,544 670,151
Change in net unrealized appreciation 841,203 5,115,600
------------------ -------------------
Net increase in net assets resulting from operations 3,365,866 5,699,979
------------------ -------------------
Distributions to shareholders
From net realized gain (680,581) 0
------------------ -------------------
Share Transactions
Net proceeds from sale of shares 12,130,823 3,403,006
Shares issued in reinvestment of distributions 651,634 0
Shares redeemed (4,614,823) (1,672,500)
------------------ -------------------
Net increase in net assets
resulting from share transactions 8,167,634 1,730,506
------------------ -------------------
Total increase in net assets 10,852,919 7,430,485
Net Assets
Beginning of period 14,067,805 6,637,320
------------------ -------------------
End of period [including accumulated
undistributed net investment income (loss) of
$0 and $0, respectively] $ 24,920,724 $ 14,067,805
================== ===================
</TABLE>
See accompanying notes which are an integral part of the financial statements.
<PAGE>
Fountainhead Special Value Fund
Financial Highlights
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Period
ended
For the year ended October 31, October 31,
-------------------------------------------------------------
2000 1999 1998 1997 (a)
-------------- -------------- -------------- ---------------
Selected Per Share Data
Net asset value, beginning of period $ 22.86 $ 12.61 $ 13.35 $ 10.00
-------------- -------------- -------------- ---------------
Income from investment operations
Net investment income (loss) (0.31) (0.16) (0.09) (0.02)
Net realized and unrealized gain (loss) 5.70 10.41 (0.51) 3.37
-------------- -------------- -------------- ---------------
Total from investment operations 5.39 10.25 (0.60) 3.35
-------------- -------------- -------------- ---------------
Less Distributions
From net realized gain (1.04) 0.00 (0.14) 0.00
-------------- -------------- -------------- ---------------
Net asset value, end of period $ 27.21 $ 22.86 $ 12.61 $ 13.35
============== ============== ============== ===============
Total Return 23.35% 81.28% (4.67)% 33.70% (b)
Ratios and Supplemental Data
Net assets, end of period (000) $ 24,921 $ 14,068 $ 6,637 $ 2,629
Ratio of expenses to average net assets 1.42% 1.25% 1.20% 0.97% (c)
Ratio of expenses to average net assets
before fee waivers and reimbursement 2.03% 2.50% 2.76% 8.25% (c)
Ratio of net investment income (loss) to
average net assets (1.15)% (0.95)% (0.67)% (0.16)(c)
Ratio of net investment income (loss) to
average net assets
before fee waivers and reimbursement (1.76)% (2.20)% (2.22)% (7.45)(c)
Portfolio turnover rate 125.24% 177.56% 108.31% 130.63% (c)
(a) December 31, 1996 (commencement of operations) to October 31, 1997
(b) For periods of less than a full year, total return is not annualized.
(c) Annualized
</TABLE>
See accompaning notes which are an integral part of the financial statements.
<PAGE>
<PAGE>
Fountainhead Special Value Fund
Notes To Financial Statements
October 31, 2000
NOTE 1. ORGANIZATION
The Fountainhead Special Value Fund (the "Fund") is organized as a series of the
AmeriPrime Funds, an Ohio business trust (the "Trust"). The Fund is registered
under the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment objective is to provide
long-term capital growth. The Declaration of Trust Agreement for the fund
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 the
Fund in the preparation of its financial statements.
Securities Valuation - Securities, which are traded on any exchange or on the
NASDAQ over-the-counter market are valued at the last-quoted sale price. Lacking
a last sale price, a security is valued at its last bid price except when, in
the opinion of the Advisor (as such term is defined in note 3 of this document),
the last bid price does not accurately reflect the current value of the
security. All other securities for which over-the-counter market quotations are
readily available are valued at their last bid price. When market quotations are
not readily available, when the Advisor determines the last bid price does not
accurately reflect the current value, or when restricted securities are being
valued, such securities are valued as determined in good faith by the Advisor,
in conformity with guidelines adopted by and subject to review of the Board.
Fixed-income securities generally are valued by using market quotations, but may
be valued on the basis of prices furnished by a pricing service when the Advisor
believes such prices accurately reflect the fair market values of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith by the Advisor,
subject to review by the Board. Short-term investments in fixed-income
securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the
amortized-cost method of valuation, which the Board has determined will
represent fair value.
Federal Income Taxes - The Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all its net investment income and any realized
capital gains.
Dividends and Distributions - The Fund intends to distribute substantially all
of its net investment income as dividends to its shareholders on at least an
annual basis. The Fund intends to distribute its net long-term capital gains and
its net short-term capital gains at least once a year.
Redemption Fees - The Fund charges a redemption fee of 1% of the current net
asset value of shares redeemed if the shares are owned less than 180 days. The
fee is charged for the benefit of remaining shareholders to defray Fund
portfolio transaction expenses and facilitate portfolio management. This fee
applies to shares being redeemed in the order in which they are purchased. The
fee, which is retained by the Fund, is accounted for as an addition to paid-in
capital.
Fountainhead Special Value Fund
Notes To Financial Statements
October 31, 2000 - continued
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued
Other - The Fund follows industry practice and records security transactions on
the trade date. The specific identification method is used for determining gains
or losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrual
basis. Discounts and premiums on securities purchased are amortized over the
life of the respective securities. Generally accepted accounting principles
require that permanent financial reporting tax differences relating to
shareholder distributions be reclassified to paid-in capital for the Fund.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains King Investment Advisors, Inc. (the "Advisor") to manage the
Fund's investments. Roger E. King, President of the Advisor, is primarily
responsible for the day-to-day management of the Fund's portfolio.
Under the terms of the management agreement (the "Agreement"), the Advisor
manages the Fund's investments subject to approval of the Board. 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 1.43% of the
average daily net assets of the Fund. For the year ended October 31, 2000 the
Advisor received a fee of $296,201 from the Fund. The Advisor contractually
agreed to waive fees and reimburse expenses for the Fund to the extent necessary
to maintain total operating expenses at the rate of 1.25% of net assets through
February 29, 2000 and 1.50% of net assets from March 1, 2000 through March 1,
2001. For the year ended October 31, 2000, the Advisor waived fees and
reimbursed expenses of $125,396.
Effective October 12, 2000, AmeriPrime Financial Services, Inc. and Unified Fund
Services, Inc. ("Unified"), both wholly owned subsidiaries of Unified Financial
Services, Inc., merged with one another. Prior to the merger, Ameriprime
Financial Services, Inc. served as Administrator to the Fund. The result of this
merger is now Unified Fund Services, Inc., still a wholly owned subsidiary of
Unified Financial Services, Inc.
The Fund retains Unified (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.
Unified receives a monthly fee from the Fund equal to an annual rate of 0.10% of
the Fund's assets under $50 million, 0.075% of the Fund's assets from $50
million to $100 million, and 0.050% of the Fund's assets over $100 million
(subject to a minimum fee of $2,500 per month). For the year ended October 31,
2000, Unified received fees of $30,000 from the Fund for administrative services
provided to the Fund.
The Fund also retains Unified to act as the Fund's transfer agent and fund
accountant. For its services as transfer agent, Unified receives a monthly fee
from the Fund of $1.20 per shareholder (subject to a minimum monthly fee of
$900). For the year ended October 31, 2000, Unified received fees of $10,967
from the Fund for transfer agent services provided to the Fund and fees of
$5,005 from the Fund for out of pocket expenses. For its services as fund
accountant, Unified receives an annual fee from the Fund equal to 0.0275% of the
Fund's assets up to $100 million, 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 million to $100 million). For the year ended October 31, 2000, Unified
received fees of $24,500 from the Fund for fund accounting services provided to
the Fund.
Fountainhead Special Value Fund
Notes To Financial Statements
October 31, 2000 - continued
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued
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 the Fund's shares. No payments were made to the
Distributor for the year ended October 31, 2000.
Certain members of management of the Administrator, transfer agent and the
Distributor are also members of management of the Trust.
NOTE 4. SHARE TRANSACTIONS
As of October 31, 2000, the Fund had an unlimited number of authorized shares.
Paid-in capital at October 31, 2000 was $16,601,316.
Transactions in shares were as follows:
<TABLE>
<S> <C> <C> <C> <C>
Year ended Year ended
October 31, 2000 October 31, 1999
Shares Dollars Shares Dollars
Shares sold 447,491 12,130,823 194,253 3,403,006
Shares issued
in reinvestment of
dividends 651,634 0 0 0
Shares redeemed (169,471) (4,614,823) (105,383) (1,672,500)
---------------------------------- -----------------------------------
300,686 8,167,634 88,870 1,730,506
================================== ===================================
</TABLE>
NOTE 5. INVESTMENTS
For the year ended October 31, 2000, purchases and sales of investment
securities, other than short-term investments, totaled $32,119,793 and
$24,785,539, respectively. The gross unrealized appreciation for all securities
totaled $6,725,720 and the gross unrealized depreciation for all securities
totaled $1,059,427 for a net unrealized appreciation of $5,666,293. The total
cost of securities for federal income tax purposes at October 31, 2000 was
$19,289,217.
NOTE 6. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 7. RELATED PARTY TRANSACTIONS
The Advisor is not a registered broker-dealer of securities and thus does not
receive commissions on trades made on behalf of the Fund. The beneficial
ownership, either directly or indirectly, of more than 25% of the voting
securities of a Fund creates a presumption of control of the Fund, under Section
2(a)(9) of the Investment Company Act of 1940. As of October 31, 2000, Charles
Schwab & Co., for the benefit of its customers, beneficially owned over 28% of
the Fund.
<PAGE>
To The Shareholders and Board of Trustees
Fountainhead Special Value Fund
We have audited the accompanying statement of assets and liabilities of the
Fountainhead Special Value Fund, including the schedule of portfolio investments
as of October 31, 2000, the related statement of operations, the statements of
changes in net assets, and the financial highlights for each of the periods
indicated. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 2000, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fountainhead Special Value Fund as of October 31, 2000, the results of their
operations, the changes in their net assets, and their financial highlights for
each of the periods indicated in conformity with generally accepted accounting
principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
November 19, 2000
<PAGE>
Dear Fellow Shareholders:
Investment Results - Fiscal Year Ended October 2000
The GLOBALT Growth Fund (the "Fund"), whose ticker symbol is GROWX, ended
its October fiscal year with a 10.78% total return for the year, net of all fees
and expenses. The net asset value was $20.72 at fiscal year end. The Fund has
returned 152.25% since inception December 1, 1995. Please note that the Fund
paid its fiscal year dividend on December 21, 2000.
Growth of $25,000
December 1, 1995 to October 31, 2000
Globalt Russell
Growth 1000
Date Fund S&P 500 Growth
-------- ----------- ----------
Dec-95 $ 26,600 $ 25,483 $ 25,143
Jan-96 27,600 26,349 25,984
Apr-96 29,074 27,244 27,190
Jul-96 28,074 26,813 26,537
Oct-96 31,195 29,718 29,372
Jan-97 33,914 33,289 33,133
Apr-97 33,862 34,092 33,195
Jul-97 40,773 40,795 40,303
Oct-97 39,663 39,262 38,343
Jan-98 41,342 42,247 41,623
Apr-98 47,663 48,092 47,181
Jul-98 48,219 48,662 48,330
Oct-98 44,929 47,894 47,787
Jan-99 54,438 55,970 59,353
Apr-99 54,237 58,585 59,703
Jul-99 54,266 57,219 59,951
Oct-99 56,920 58,877 64,153
Jan-00 61,416 60,417 71,141
Apr-00 63,306 63,113 76,157
Jul-00 63,544 62,358 74,556
Oct-00 63,060 62,470 70,130
|X| Past performance is not predictive of future performance.
|X| The GLOBALT Growth Fund's historical results are net of all expenses,
versus the gross market benchmark (the S&P 500 Index). Investors are
reminded that when trying to achieve benchmark returns, investment
management fees, transaction costs and execution costs will be
incurred.
|X| The S&P 500 Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The Index is
adjusted for dividends and weighted toward stocks with large market
capitalizations.
|X| Inception Date: December 1, 1995.
Investment Approach
To review, our approach to managing the GLOBALT Growth Fund is to achieve
long-term growth of capital by investing in U.S. companies which we believe
offer superior growth potential through exposure to rapidly growing
international markets. The Fund only invests in stocks of U.S. companies that
are expected to derive a portion of their revenues outside the U.S. GLOBALT's
investment team seeks to optimize the Fund's exposure to the best global
opportunities.
Commentary and Outlook
The stock market and the U.S. economy are both in a volatile transition
that is confusing and unsettling for investors. Ironically, investors are
getting what they have wanted -- a slower, more sustainable economic growth rate
and a broader stock market. Nevertheless, market sentiment has turned distinctly
negative. Suddenly there is anxiety that the economy won't achieve the expected
"soft landing" and that we are now entering a bear market.
We are in a corrective phase, in which prices are quickly being adjusted to
the reality of lower corporate earnings and excessive speculation in some
sectors. No one knows how the U.S. and global economies will unfold over the
coming months, or how long it will take the stock market to adjust to these
circumstances and the current uncertainty associated with national elections.
However, since we believe the U.S. economy will remain in its best structural
shape in decades, and the Federal Reserve is on the way to accomplishing its
goals, it is reasonable to expect the interruption in earnings growth will be
relatively short. The stock market is a discounting mechanism, and it is rather
quickly discounting a slowdown in both economic growth and corporate profits.
However, the market anticipates reversals in trends, and stocks can prosper even
in a period of decelerating earnings growth following the Federal Reserve's
period of active restraint.
Shareholders know that we are long-term bulls on globally competitive U.S.
companies, and we believe they are positioned to benefit following this period
of uncertainty. Despite the sharp decline in many technology stocks, we consider
it imperative to maintain exposure to this key sector.* As the new economy moves
from hype to reality, the successful companies will be those that create value
for their customers and shareholders by actually using the new technologies to
make business more responsive and cost effective. We will use this period to
endeavor to separate the long-term winners from the losers and position
portfolios to keep shareholder value growing.
We welcome our new shareholders and look forward to furthering the
investment objectives of all our shareholders. We believe it is important to
note that all eligible GLOBALT 401(k) plan participants have elected to be
investors in the Fund and collectively are among the Fund's largest
shareholders. As always, your questions and comments are welcome. We appreciate
your confidence in the GLOBALT Growth Fund.
Sincerely,
Samuel E. Allen
Chief Executive Officer
* While it is anticipated that the Fund will diversify its investments across a
range of industries, certain sectors (such as the technology sector) are likely
to be overweighted compared to others because the Fund's advisor seeks the best
investment values regardless of sector. One of the risks associated with an
overweighting in any sector is that a weakness in this sector could result in
significant losses to the Fund.
Fund Investment
Shares of the Fund are sold on a continuous basis.
Through the Fund's transfer agent, Unified Fund Services, you may invest
any amount you choose as often as you wish, subject to a minimum initial
investment of $25,000 and minimum subsequent investments of $5,000 ($2,000 for
IRA accounts). Shares may also be purchased through a broker dealer or other
financial institution authorized by the Fund's distributor (investors may be
charged a fee for this service). Purchases can be made by mail or by bank wire
(please see prospectus for more information).
The Fund is also available through Fidelity's FUNDSNetwork with a minimum
investment of $2,500 ($1,000 through a qualified retirement plan). It is listed
as the AmeriPrime Funds - GLOBALT Growth Fund (symbol: GROWX). Fidelity can be
reached at 1-800-544-5555 or on the Internet at www.fidelity.com.
The Fund is also available through the Schwab Mutual Fund OneSource service
at 1-800-435-4000 or on the Internet at www.schwab.com. The minimum investment
in the Fund through this service is $2,500 ($1,000 through a qualified
retirement plan). The GLOBALT Growth Fund's mutual fund symbol at Schwab is
GROWX. This enables the GLOBALT Growth Fund to be included as an investment
option in 401(k) plans.
<PAGE>
GLOBALT Growth Fund
Schedule of Investments - October 31, 2000
<TABLE>
<S> <C> <C>
Common Stocks - 92.7% Shares Value
Business Equipment & Services - 5.5%
America Online, Inc. (a) 2,700 $ 136,350
BEA Systems, Inc. (a) 3,000 215,250
Computer Sciences Corp. (a) 1,500 94,500
MicroMuse, Inc. (a) 900 152,719
Omnicom Group, Inc. 3,800 350,550
Yahoo!, Inc. (a) 3,600 211,050
--------------
1,160,419
--------------
Capital Goods - 6.1%
Black & Decker Corp. 8,400 316,050
Emerson Electric Co. 3,500 257,031
Molex, Inc. - Class A 9,150 359,709
TYCO International, Ltd. 6,100 345,794
--------------
1,278,584
--------------
Computer Hardware - 7.1%
Cisco Systems, Inc. (a) 11,800 635,725
Compaq Computer Corp. 7,600 231,116
EMC Corp. (a) 1,700 151,406
International Business Machines Corp. 3,200 315,200
Juniper Networks, Inc. (a) 200 39,000
Sun Microsystems, Inc. (a) 1,100 121,963
--------------
1,494,410
--------------
Computer Software - 10.9%
Microsoft Corp. (a) 12,400 854,050
Network Appliance, Inc. (a) 2,020 240,380
Openwave Systems, Inc. (a) 1,200 111,075
Oracle, Corp. (a) 11,000 363,000
Portal Software, Inc. (a) 2,900 102,044
Rational Software Corp. (a) 2,200 131,312
Siebel Systems, Inc. (a) 700 73,456
Veritas Software Company (a) 3,000 423,047
--------------
2,298,364
--------------
Consumer Durables - 1.2%
Danaher, Corp. 4,100 258,813
--------------
Consumer Non - Durables - 2.9%
Avon Products, Inc. 5,300 257,050
Kimberly Clark Corp. 3,900 257,400
Ralston - Ralston Purina Co. 3,700 89,725
--------------
604,175
--------------
Consumer Services - 1.7%
Viacom, Inc. - Class B (a) 6,400 364,000
--------------
GLOBALT Growth Fund
Schedule of Investments - October 31, 2000 - continued
Common Stocks - continued Shares Value
Electronic Equipment - 3.9%
Conexant Systems, Inc. (a) 10,600 $ 278,913
Jabil Circuit, Inc. (a) 3,600 205,425
Maxim Integrated Products, Inc. (a) 1,400 92,837
SDL, Inc. (a) 1,000 259,250
--------------
836,425
--------------
Energy - 4.5%
Apache Corp. 1,000 55,313
Baker Hughes, Inc. 1,800 61,875
Ensco International, Inc. 7,500 249,375
Global Marine, Inc. (a) 7,000 185,500
Pride International, Inc. (a) 5,900 149,344
Tidewater, Inc. 5,600 258,650
--------------
960,057
--------------
Financial Services - 8.0%
AFLAC, Inc. 4,500 328,781
American Express Co. 3,900 234,000
American International Group, Inc. 2,400 235,200
Charles Schwab Corp. 3,000 105,375
Citigroup, Inc. 9,133 480,624
Donaldson, Lufkin, & Jenrette, Inc. 1,000 89,813
Franklin Resources, Inc. 3,600 154,224
State Street Corp. 500 62,370
--------------
1,690,387
--------------
Health Care - 13.9%
Amgen, Inc. (a) 6,600 382,387
Becton Dickinson, Inc. 4,300 144,050
Bristol - Myers Squibb Co. 9,900 603,281
Eli Lilly & Co. 1,900 169,812
Genzyme Corp. (a) 1,000 71,000
Immunex Corp. (a) 4,900 208,556
Johnson & Johnson 2,812 259,056
Medimmune, Inc. (a) 1,800 117,675
Merck & Co. 2,300 206,856
Pfizer, Inc. 12,850 554,959
Pharmacia Corp. 3,800 209,000
--------------
2,926,632
--------------
Laboratory Analytical Instruments - 1.2%
PE Corp. - PE Biosystems Group 2,100 245,700
--------------
GLOBALT Growth Fund
Schedule of Investments - October 31, 2000 - continued
Common Stocks - continued Shares Value
Multi - Industry - 10.4%
Comverse Technology, Inc. (a) 1,820 $ 203,385
Corning, Inc. 900 68,850
General Electric Co. 17,700 970,181
Minnesota Mining and Manufacturing Co. 5,100 492,787
United Technologies Corp. 6,700 467,744
--------------
2,202,947
--------------
Retail Sector - 2.6%
Costco Wholesale Corp. (a) 12,500 457,813
Starbucks Corp. (a) 2,200 98,312
--------------
556,125
--------------
Semi - Conductors - 6.0%
Altera Corp. (a) 7,000 286,563
Analog Devices, Inc. (a) 1,700 110,500
Applied Micro Circuits Corp. (a) 2,000 152,000
Broadcom Corp. Class A (a) 400 88,950
Cree, Inc. (a) 2,400 238,200
Intel Corp. 8,600 387,000
--------------
1,263,213
--------------
Telecommunications - 1.9%
ADC Telecom, Inc. (a) 3,000 64,125
Avaya, Inc. (a) 875 11,758
Ciena Corp. (a) 800 84,100
ONI Systems Corp. (a) 800 64,850
Scientific - Atlanta, Inc. 2,600 177,937
--------------
402,770
--------------
Utilities - 4.9%
AES Corp. (a) 2,900 163,850
Qwest Communications International, Ltd. (a) 6,321 307,359
Williams Cos., Inc. 6,300 263,419
WorldCom, Inc. (a) 12,400 294,500
--------------
1,029,128
--------------
TOTAL COMMON STOCKS (Cost $15,982,051) 19,572,149
--------------
GLOBALT Growth Fund
Schedule of Investments - October 31, 2000 - continued
Principal
Amount Value
Money Market Securities - 8.0%
Firstar Treasury Fund, 5.55% (b) (Cost $1,695,706) 1,695,706 $ 1,695,706
--------------
TOTAL INVESTMENTS - (Cost $17,677,757) - 100.7% 21,267,855
--------------
Liabilities in excess of other assets - (0.7)% (158,112)
--------------
Total Net Assets - 100.0% 21,109,743
==============
(a) Non-income producing
(b) Variable rate security; the coupon rate shown represents the rate at October
31, 2000.
</TABLE>
See accompanying notes which are an integral part of the finanacial statements.
<PAGE>
GLOBALT Growth Fund October 31, 2000
Statement of Assets and Liabilities
<TABLE>
<S> <C> <C>
Assets
Investment in securities, at value (cost $17,677,757) $ 21,267,855
Cash 497
Dividends receivable 2,916
Interest receivable 5,747
Receivable for fund shares sold 1,000
Receivable for investments sold 1,546,305
-----------------
Total assets 22,824,320
Liabilities
Accrued investment advisory fee $ 23,349
Payable for investments purchased 1,691,228
-----------------
Total liabilities 1,714,577
-----------------
Net Assets $ 21,109,743
=================
Net Assets consist of:
Paid in capital 15,329,649
Accumulated undistributed net investment loss (2,886)
Accumulated undistributed net realized gain on investments 2,192,882
Net unrealized appreciation on investments 3,590,098
-----------------
Net Assets, for 1,019,026 shares $ 21,109,743
=================
Net Asset Value
Net Assets
Offering price and redemption price per share ($21,109,743 / 1,019,026) $ 20.72
==============
See accompanying notes which are an integral part of the finanacial statements.
</TABLE>
<PAGE>
GLOBALT Growth Fund
Statement of Operations for the year ended October 31, 2000
<TABLE>
<S> <C> <C>
Investment Income
Dividend income $ 108,385
Interest income 42,431
----------------
Total Income 150,816
Expenses
Investment advisory fee $ 238,783
Trustees' fees 3,064
---------------
Total operating expenses 241,847
----------------
Net Investment Loss (91,031)
----------------
Realized & Unrealized Gain (Loss)
Net realized gain on investment securities 2,192,866
Change in net unrealized depreciation
on investment securities (228,467)
---------------
Net realized & unrealized gain on investment securities 1,964,399
----------------
Net increase in net assets resulting from operations $ 1,873,368
================
See accompanying notes which are an integral part of the finanacial statements.
</TABLE>
<PAGE>
GLOBALT Growth Fund
Statement of Changes in Net Assets
<TABLE>
<S> <C> <C>
Year Year
ended ended
October 31, October 31,
2000 1999
----------------- -----------------
Increase/(Decrease) in Net Assets
Operations
Net investment loss $ (91,031) $ (42,743)
Net realized gain on investment securities 2,192,866 844,362
Change in net unrealized appreciation (depreciation) (228,467) 2,489,533
----------------- -----------------
Net increase in net assets resulting from operations 1,873,368 3,291,152
----------------- -----------------
Distributions to shareholders
From net investment income 0 (15,584)
From net realized gain (843,736) (592,834)
----------------- -----------------
Total distributions (843,736) (608,418)
----------------- -----------------
Share Transactions
Net proceeds from sale of shares 3,981,216 4,333,512
Shares issued in reinvestment of distributions 736,101 608,118
Shares redeemed (1,571,246) (2,399,432)
----------------- -----------------
Net increase in net assets resulting
from share transactions 3,146,071 2,542,198
----------------- -----------------
Total increase in net assets 4,175,703 5,224,932
Net Assets
Beginning of period 16,934,040 11,709,108
----------------- -----------------
End of period [including accumulated
net investment loss of $2,886 and $2,886, respectively] $ 21,109,743 $ 16,934,040
================= =================
See accompanying notes which are an integral part of the finanacial statements.
</TABLE>
<PAGE>
GLOBALT Growth Fund
Financial Highlights
<TABLE>
<S> <C> <C> <C> <C> <C>
Years ended October 31, Period
------------------------------------------------------------------ ended
October 31,
2000 1999 1998 1997 1996 (a)
-------------- -------------- -------------- --------------- ---------------
Selected Per Share Data
Net asset value, beginning of period $ 19.53 $ 16.14 $ 15.66 $ 12.48 $ 10.00
-------------- -------------- -------------- --------------- ---------------
Income from investment operations:
Net investment income (loss) (0.09) (0.05) 0.02 0.01 0.01
Net realized and unrealized gain 2.23 4.27 1.86 3.34 2.47
-------------- -------------- -------------- --------------- ---------------
Total from investment operations 2.14 4.22 1.88 3.35 2.48
-------------- -------------- -------------- --------------- ---------------
Less Distributions
From net investment income 0.00 (0.02) (0.01) 0.00 0.00
From net realized gain (0.95) (0.81) (1.39) (0.17) 0.00
-------------- -------------- -------------- --------------- ---------------
Total Distributions (0.95) (0.83) (1.40) (0.17) 0.00
-------------- -------------- -------------- --------------- ---------------
Net asset value, end of period $ 20.72 $ 19.53 $ 16.14 $ 15.66 $ 12.48
============== ============== ============== =============== ===============
Total Return 10.78% 26.67% 13.28% 27.15% 24.80% (b)
Ratios and Supplemental Data
Net assets, end of period (000) $21,110 $16,934 $11,709 $8,003 $3,443
Ratio of expenses to average net assets 1.18% 1.17% 1.17% 1.17% 1.16% (c)
Ratio of expenses to average net assets
before reimbursement 1.18% 1.18% 1.19% 1.19% 1.25% (c)
Ratio of net investment income (loss) to
average net assets (0.45)% (0.27)% 0.14% 0.06% 0.11% (c)
Ratio of net investment income (loss) to
average net assets before reimbursement (0.45)% (0.28)% 0.12% 0.04% 0.02% (c)
Portfolio turnover rate 159.09% 120.46% 83.78% 110.01% 66.42% (c)
(a) December 1, 1995 (commencement of operations) to October 31, 1996
(b) For periods of less than a full year, total return is not annualized.
(c) Annualized
See accompanying notes which are an integral part of the finanacial statements.
</TABLE>
<PAGE>
GLOBALT Growth Fund
Notes to Financial Statements
October 31, 2000
NOTE 1. ORGANIZATION
GLOBALT Growth Fund (the "Fund") was organized as a series of the
AmeriPrime Funds, an Ohio business trust (the "Trust) on October 20, 1995 and
commenced operations on December 1, 1995. The Fund is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment objective is to provide
long-term growth of capital. The Declaration of 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
the Fund in the preparation of its financial statements.
Securities Valuation- Securities, which are traded on any exchange or on the
NASDAQ over-the-counter market, are valued at the last quoted sale price.
Lacking a last sale price, a security is valued at its last bid price except
when, in the opinion of the Advisor (as such term is defined in note 3 of this
document), the last bid price does not accurately reflect the current value of
the security. All other securities for which over-the-counter market quotations
are readily available are valued at their last bid price. When market quotations
are not readily available, when the Adviser determines the last bid price does
not accurately reflect the current value or when restricted securities are being
valued, such securities are valued as determined in good faith by the Adviser,
in conformity with guidelines adopted by and subject to review of the Board of
trustees of the trust.
Fixed-income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Adviser believes such prices accurately reflect the fair market value of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith by the Adviser,
subject to review of the Board. Short-term investments in fixed-income
securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
Federal Income Taxes- The Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.
Dividends and Distributions- The Fund intends to comply with federal tax rules
regarding distribution of substantially all of its net investment income and
capital gains. These rules may cause multiple distributions during the course of
the year.
Other- The Fund follows industry practice and records security transactions on
the trade date. The specific identification method is used for determining gains
or losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrual
basis. Discounts and premiums on securities purchased are amortized over the
life of the respective securities. Generally accepted accounting principles
require that permanent financial reporting tax differences relating to
shareholder distributions be reclassified to paid-in capital.
GLOBALT Growth Fund
Notes to Financial Statements
October 31, 2000 - continued
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains GLOBALT, Inc. (the "Adviser") to manage the Fund's
investments. The adviser was organized as a Georgia corporation in 1990. Samuel
Allen, Chairman of the Adviser, is the controlling shareholder of GLOBALT, Inc.
The investment decisions for the Fund are made by a committee of the Adviser,
which is primarily responsible for the day-to-day management of the Fund's
portfolio.
Under the terms of the management agreement (the "Agreement"), the Adviser
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of the Fund except brokerage fees and commissions,
taxes, interest, fees and expenses of non-interested person trustees, and
extraordinary expenses. As compensation for its management services and
agreement to pay the Fund's expenses, the Fund is obligated to pay the Adviser a
fee computed and accrued daily and paid monthly at an annual rate of 1.17% of
the average daily net assets of the Fund. It should be noted that most
investment companies pay their own operating expenses directly, while the Fund's
expenses, except those specified above, are paid by the Adviser. For the year
ended October 31, 2000, the Adviser received a fee of $238,783 from the Fund.
Effective October 12, 2000, AmeriPrime Financial Services, Inc. and Unified
Fund Services, Inc. ("Unified"), both wholly owned subsidiaries of Unified
Financial Services, Inc., merged with one another. Prior to the merger,
Ameriprime Financial Services, Inc. served as Administrator to the Fund. The
result of this merger is now Unified Fund Services, Inc., still a wholly owned
subsidiary of Unified Financial Services, Inc.
The Fund retains Unified Fund Services, Inc., a wholly owned subsidiary of
Unified Financial Services, Inc., to manage the Fund's business affairs and
provide the Fund with administrative, transfer agency, and fund accounting
services, including all regulatory reporting and necessary office equipment and
personnel. The Adviser paid all administrative, transfer agency, and fund
accounting fees on behalf of the Fund per the management agreement. 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 the fund's shares. There were no payments made to the Distributor
for the year ended October 31, 2000. Certain members of management of Unified
Fund Services, Inc. and the Distributor are also directors and/or officers of
the Trust.
NOTE 4. SHARE TRANSACTIONS
As of October 31, 2000, there were an unlimited number of authorized shares
for the Fund. Paid-in capital at October 31, 2000 was $15,329,649.
Transactions in shares were as follows:
Year ended Year ended
October 31, 2000 October 31, 1999
Shares Dollars Shares Dollars
Shares sold 191,757 $3,981,216 237,096 $4,333,512
Shares issued in 34,221 736,101 34,260 608,118
reinvestment of
dividends
Shares redeemed (73,904) (1,571,246) (130,011) (2,399,432)
----------------------------------------------------
152,074 $3,146,071 141,345 $2,542,198
====================================================
<PAGE>
GLOBALT Growth Fund
Notes to Financial Statements
October 31, 2000 - continued
NOTE 5. INVESTMENTS
For the year ended October 31, 2000, purchases and sales of investment
securities, other than short-term investments, aggregated $32,639,728 and
$31,047,053, respectively. The gross unrealized appreciation for all securities
totaled $3,841,709 and the gross unrealized depreciation for all securities
totaled $251,611 for a net unrealized appreciation of $3,590,098. The aggregate
cost of securities for federal income tax purposes at October 31, 2000 was
$17,677,757.
NOTE 6. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and Board of Trustees
GLOBALT Growth Fund
We have audited the accompanying statement of assets and liabilities of the
GLOBALT Growth Fund, including the schedule of portfolio investments as of
October 31, 2000, the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the four years in the
period then ended and for the period of December 1, 1995 (commencement of
operation) through October 31, 1996. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 2000, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
GLOBALT Growth Fund as of October 31, 2000, the results of their operations for
the year then ended, the changes in their net assets for each of the two years
in the period then ended, and the financial highlights for each of the four
years in the period then ended, and for the period of December 1, 1995
(commencement of operation) through October 31, 1996, in conformity with
generally accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
November 19, 2000