united states
securities and exchange commission
washington, d.c. 20549
form n-csr
certified shareholder report of registered management
investment companies
Investment Company Act file number 811-09096
Ameriprime Funds
(Exact name of registrant as specified in charter)
431 North Pennsylvania Street, Indianapolis, Indiana 46204
(Address of principal executive offices) (Zip code)
Unified Fund Services, 431 North Pennsylvania Street, Indianapolis,Indiana 46204
(Name and address of agent for service)
Registrant's telephone number, including area code: 317-917-7000
Date of fiscal year end: 08/31
Date of reporting period: 02/28/2003
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. 3507.
<page>
Item 1. Reports to Stockholders.
February 28, 2003
Dear Fellow Shareholders,
The IMS Strategic Income Fund opened on November 1, 2002, and recently
completed four full months of operation. The Fund has been well received by
investors so far. During this initial period, the Fund attracted shareholders
that invested approximately $7,351,345. We are pleased with the Fund's
acceptance in the marketplace and expect it to continue to grow its asset base
in the current environment in which investors are looking for alternatives to
the stock market, typical bond funds and the low interest rates offered by
financial institutions. Since this is our initial letter to shareholders, it
makes sense to summarize our basic goals and objectives for the Fund. The goal
was to create a fund that would be different, one that would be an intelligent
alternative to the typical bond and fixed income funds available today. We
intend to produce a track record that will establish the Fund as one of the best
in the industry. We will focus on delivering a high current yield (currently
7.49%) in the form of monthly dividends, while maintaining a relatively stable
share price. We designed the fund with the flexibility to hold investments with
low interest-rate sensitivity, if necessary, since we see rising interest rates
as the biggest threat to most fixed income investors today. You may ask why we
have such lofty goals and how we can reasonably expect to accomplish them.
First, we have a tremendous amount of confidence in our proven research methods.
They have served us well over the last 15 years and their success is evident in
the track record of the IMS Capital Value Fund. For example, BusinessWeek
magazine recently singled out the IMS Capital Value Fund as one of the best
funds in the country over the last five years, in terms of risk-adjusted returns
(January 27, 2003, pg. 58). In addition, the Wall Street Journal recently listed
the IMS Capital Value Fund as one of the ten best funds in the country for the
prior year, in its category (March 4, 2003, pg. D6). We bring this up only
because the research methods we use to analyze companies for IMS Capital Value
Fund are the same methods we use to select investments for the IMS Strategic
Income Fund. In fact, in many cases, we own the same companies, but instead of
owning their common stock, we own their bonds, convertibles or preferreds for
income purposes. While the Fund may be new, the strategy is not. We manage the
Fund in the same way that we have managed the fixed income portion of our
private accounts since 1988. What else sets this Fund apart? Flexibility. We
built a significant level of flexibility into our prospectus. There are few
funds, if any, that have the same level of flexibility in terms of weightings
and types of investments. This flexibility is key since most fixed income fund
managers are limited by prospectus to one primary type of investment such as
investment grade bonds. While most bond fund managers may want to invest
elsewhere, recognizing today's historically low interest rates for instance,
they are forced by prospectus to stay right where they are. The IMS Strategic
Income Fund is not faced with this dilemma. We have the flexibility to invest in
all types of income producing securities as we see fit. It gives us the latitude
to do what makes sense for our shareholders and ultimately to outperform most
other fixed income managers. Obviously, there is no guarantee that we will
accomplish the challenging objectives that we have set for the IMS Strategic
Income Fund. However, based on what we have been able to achieve with the IMS
Capital Value Fund, we have every confidence that we will be successful. We
thank you for your vote of confidence, which you have demonstrated by investing
with us. We will be working hard to over the next few years to earn your
continued trust. By our results, we hope to demonstrate that you made a smart
decision.
Sincerely,
Carl W. Marker
Portfolio Manager, IMS Strategic Income Fund
President & Founder, IMS Capital Management, Inc.
For more complete information, including charges and expenses, obtain a
prospectus by calling 1-877-289-4769. The prospectus should be read carefully
before investing. The Fund is distributed by Unified Financial Securities, Inc.,
member NASD
Past performance is no guarantee of future results. The investment return
and principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
<page>
Management Discussion & Analysis
The IMS Strategic Income Fund opened on November 1, 2002 and completed four
full months of operation as of February 28, 2003. During the four month period,
the Fund produced a total return of 5.64%.
The Fund opened with an initial net asset value (NAV) per share of $10.00,
and by the end of the period, the Fund's share price stood at $10.42, after
paying $0.14 in total dividends on December 12th, January 16th and February
18th.
The Fund had a current 30-day yield as of February 28, 2003 of 6.00%, and
net assets of $7,529,319.
IMS Strategic Income Fund
Performance and Yield Summary
Total return since inception on November 1, 2002: 5.64%
SEC 30-Day Yield as of February 28, 2003: 6.00%
Past performance is no guarantee of future results. Please read the
prospectus carefully before investing as it contains important information about
the risks, fees, and expenses associated with investing in the Fund. Share price
and principal value will vary thus shares when redeemed may be worth more or
less than original cost. The figures above do not reflect the taxes that an
investor might pay on the dividend distributions if shares are held in a taxable
account.
<page>
IMS Strategic Income Fund
Schedule of Investments
February 28, 2003 (Unaudited)
<table>
<s> <c> <c>
Common Stocks - 9.70% Shares Value
Commercial Printing - 0.44%
Donnelley, R.R. & Sons 1,800 $32,868
--------------
National Commercial Banks - 0.90%
J.P. Morgan Chase & Co. 3,000 68,040
--------------
Pharmaceutical Preparations - 0.62%
Bristol-Myers Squibb, Inc. 2,000 46,600
--------------
Real Estate Investment Trusts - 4.07%
FBR Asset Investment Corp. 3,900 125,112
Gables Residential Trust 7,100 181,192
--------------
306,304
--------------
Retail - Grocery Stores - 0.75%
Albertson's, Inc. 3,000 56,490
--------------
Services - Management Services - 0.65%
ServiceMaster Co. 5,000 48,850
--------------
Telephone Communications (No Radiotelephone) - 1.76%
Sprint Corp. 5,000 63,500
Verizon Communications, Inc. 2,000 69,160
--------------
132,660
--------------
Water Transportation - 0.51%
Nordic American Tanker Shipping Ltd. 2,800 38,500
--------------
TOTAL COMMON STOCKS (Cost $760,070) 730,312
--------------
Certificate of Deposits - 7.31%
Summit CD, 8.50%, 11/29/2007 250,000 250,000
Summit CD, 8.50%, 12/26/2007 300,000 300,000
--------------
TOTAL CERTIFICATE OF DEPOSITS (Cost $550,000) 550,000
--------------
Convertible Preferred Stocks - 8.07%
Capstead Mortgage Corp. 26,500 318,000
Cummins Capital Trust I 4,100 176,813
Ford Capital Trust II 2,800 112,700
--------------
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $607,797) 607,513
--------------
</table>
<page>
IMS Strategic Income Fund
Schedule of Investments
February 28, 2003 (Unaudited)
<table>
<s> <c> <c>
Shares Value
Corporate Bonds - 20.61%
Akamai Technologies, Inc., 5.50%, 7/1/2007 575,000 262,344
Marvel Enterprises, 12.00%, 6/15/2009 900,000 949,500
Nextel Communication, 9.50%, 2/1/2011 100,000 101,000
Public Service Energy, 10.00%, 10/1/2009 240,000 239,139
--------------
TOTAL CORPORATE BONDS (Cost $1,514,916) 1,551,983
--------------
Mutual Funds - 10.08%
ACM Income Fund, Inc. 33,100 280,688
American Strategic Income III Fund 21,200 266,272
Oppenheimer Multi-Sector Income Trust 27,000 211,950
--------------
TOTAL MUTUAL FUNDS (Cost $751,879) 758,910
--------------
Preferred Stocks - 38.34%
Ameren Corp. 5,300 137,800
Hillman Group Capital Trust 12,800 323,200
Host Marriott Financial Trust 5,100 170,213
Metropolitan Mortgage & Securities 68,600 1,663,550
Mid-American Apartment Communities 5,800 147,436
Motorola, Inc. 10,700 319,663
Realty Income Corp. 4,700 125,208
--------------
TOTAL PREFERRED STOCKS (Cost $2,924,312) 2,887,069
--------------
Money Market Securities - 14.46%
Huntington Money Market Investors Shares - Class A, 0.25%, (Cost $1,088,914) (b) 1,088,914 1,088,914
--------------
TOTAL INVESTMENTS (Cost $8,197,888) - 108.57% $ 8,174,701
--------------
Liabilities in excess of other assets - (8.57%) (645,382)
--------------
TOTAL NET ASSETS - 100.00% $ 7,529,319
==============
</table>
(a) Non-income producing.
(b) Variable rate security; the coupon rate shown represents the rate at
February 28, 2003.
<page>
IMS Strategic Income Fund
Statement of Assets and Liabilities
February 28, 2003 (Unaudited)
<table>
<s> <c>
Assets
Investments in securities, at value (cost $8,197,888) $8,174,701
Interest receivable 42,801
Dividends receivable 1,598
Receivable for fund shares sold 145,000
----------------
Total assets 8,364,100
----------------
Liabilities
Accrued advisory fees 10,912
Other payables and accrued expenses 11,213
Payable for investments purchased 812,656
----------------
Total liabilities 834,781
----------------
Net Assets $7,529,319
================
Net Assets consist of:
Paid in capital 7,526,454
Accumulated net investment income (loss) 5,872
Accumulated net realized gain (loss) on investments 20,180
Net unrealized appreciation (depreciation) on investments (23,187)
----------------
Net Assets, for 722,671 shares $7,529,319
================
Net Asset Value
Net asset value and offering price per share ($7,529,719 / 722,671) $10.42
================
Minimum redemption price per share ($10.42 * 99%) $10.32
================
</table>
<page>
IMS Strategic Income Fund
Statement of Operations
Period ended February 28, 2003 (Unaudited)
<table>
<s> <c>
Investment Income
Dividend income $42,750
Interest income 51,267
------------
Total Income 94,017
------------
Expenses
Investment advisor fee 14,175
Administration expenses 6,250
Fund accounting expenses 3,900
Legal expenses 714
Trustee expenses 628
Pricing expenses 886
Registration expenses 9,815
Printing expenses 15
Transfer agent expenses 3,948
Miscellaneous expenses 593
------------
Total Expenses 40,924
Waived and reimbursed expenses (18,474)
------------
Total operating expenses 22,450
------------
Net Investment Income (Loss) 71,567
------------
Realized & Unrealized Gain (Loss)
Net realized gain (loss) on investment securities 20,180
Change in net unrealized appreciation (depreciation)
on investment securities (23,187)
------------
Net realized and unrealized gain (loss) on investment securities (3,007)
------------
Net increase (decrease) in net assets resulting from operations $68,560
============
</table>
<page>
IMS Strategic Income Fund
Statement of Changes In Net Assets
<table>
<s> <c>
Period ended
Feb. 28, 2003 (a)
Increase (Decrease) in Net Assets (Unaudited)
-----------------
Operations
Net investment income (loss) $71,567
Net realized gain (loss) on investment securities 20,180
Change in net unrealized appreciation (depreciation) (23,187)
-----------------
Net increase (decrease) in net assets resulting from operations 68,560
-----------------
Distributions
From net investment income (65,695)
From net realized gain -
-----------------
Total distributions (65,695)
-----------------
Capital Share Transactions
Proceeds from shares sold 7,493,417
Reinvestment of distributions 59,043
Amount paid for shares repurchased (26,006)
-----------------
Net increase (decrease) in net assets
resulting
from share transactions 7,526,454
-----------------
Total Increase (Decrease) in Net Assets 7,529,319
-----------------
Net Assets
Beginning of period -
-----------------
End of period [including accumulated net
investment income (loss) of $6,272] $7,529,319
=================
Capital Share Transactions
Shares sold 719,547
Shares issued in reinvestment of
distributions 5,600
Shares repurchased (2,476)
-----------------
Net increase (decrease) from capital transactions 722,671
=================
</table>
(a) For the period November 5, 2002 (commencement of operations) to February 28,
2003.
<page>
IMS Strategic Income Fund
Financial Highlights
<table>
<s> <c>
Period ended
Feb. 28, 2003 (c)
(Unaudited)
------------------
Selected Per Share Data
Net asset value, beginning of period $10.00
------------------
Income from investment operations
Net investment income (loss) 0.22
Net realized and unrealized gain (loss) 0.34
------------------
Total from investment operations
0.56
------------------
Less Distributions to shareholders:
From net investment income (0.14)
From net realized gain 0.00
------------------
Total distributions (0.14)
------------------
Net asset value, end of period $10.42
==================
Total Return 5.64%(b)
Ratios and Supplemental Data
Net assets, end of period (000) $7,529
Ratio of expenses to average net assets 1.96%(a)
Ratio of expenses to average net assets
before waiver & reimbursement 2.24%(a)
Ratio of net investment income to
average net assets 6.25%(a)
Ratio of net investment income to
average net assets before waiver & reimbursement 5.96%(a)
Portfolio turnover rate 5.18%
</table>
(a) Annualized.
(b) For periods of less than a full year, total return is not annualized.
(c) For the period November 5, 2002 (commencement of operations) to
February 28, 2003.
<page>
IMS Strategic Income
Notes to Financial Statements
February 28, 2003 (Unaudited)
NOTE 1. ORGANIZATION
IMS Strategic Income Fund (the Fund) was organized as a non-diversified
series of AmeriPrime Funds (the Trust) on September 30, 2002 and commenced
operations on November 5, 2002. The Trust is established under the laws of Ohio
by an Agreement and Declaration of Trust dated August 8, 1995 (the Trust
Agreement). The Trust Agreement permits the Board of Trustees to issue an
unlimited number of shares of beneficial interest of separate series without par
value. The Fund is one of a series of funds currently authorized by the Board of
Trustees. The investment objective of the Fund is to provide current income. The
investment advisor of the Fund is IMS Capital Management, Inc. (the Advisor).
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements.
Securities Valuations - Securities that 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, the last bid price does not accurately
reflect the current value of the security. All other securities for which
over-the-counter market quotations are readily available are valued at their
last bid price. When market quotations are not readily available, when the
Advisor determines the last bid price does not accurately reflect the current
value or when restricted securities are being valued, such securities are valued
as determined in good faith by the Advisor, in conformity with guidelines
adopted by and subject to review of the Board of Trustees.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Advisor believes such prices accurately reflect the fair market value of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. If the Advisor decides that a price
provided by the pricing service does not accurately reflect the fair market
value of the securities, 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, in
conformity with guidelines adopted by and subject to review of the Board of
Trustees. Short-term investments in fixed income securities with maturities of
less than 60 days when acquired, or which subsequently are within 60 days of
maturity, are valued by using the amortized cost method of valuation, which the
Board of Trustees 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.
<page>
IMS Strategic Income Fund
Notes to Financial Statements
February 28, 2003 (Unaudited)
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 statement and income tax purposes.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on an accrual basis. Discounts and premiums on securities purchased are
amortized over the life of the respective securities.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains IMS Capital Management, Inc. to manage the Fund's
investments. Carl W. Marker, Chairman and President of the Advisor, is primarily
responsible for the day-to-day management of the Fund's portfolio.
Under the terms of the management agreement (the Agreement), the Advisor
manages the Fund investments subject to approval of the Board of Trustees. As
compensation for its management services, the Fund is obligated to pay the
Advisor a fee computed and accrued daily and paid monthly at an annual rate of
1.26% of the average daily net assets of the Fund. For the period ended February
28, 2003, the Advisor earned a fee of $14,175.
The Advisor has contractually agreed to waive all or a portion of its
management fees and/or reimburse expenses through October 31, 2006 to reimburse
the Fund for organizational expenses and to maintain the Fund's total operating
expenses, (excluding brokerage costs, borrowing costs, such as (a) interest and
(b) dividends on securities sold short, taxes and extraordinary expenses), as a
percentage of average daily net assets, at 1.96%. For the period ended February
28, 2003, the Advisor reimbursed expenses of $18,474.
The Fund retains Unified Fund Services, Inc. (Unified), a wholly owned
subsidiary of Unified Financial Services, Inc., to manage the Fund's business
affairs and provide the Fund with administrative services, including all
regulatory reporting and necessary office equipment and personnel. For those
services Unified receives a monthly fee from the Fund equal to an annual rate of
0.10% of the Fund's average daily net assets under $50 million, 0.075% of the
Fund's average daily net assets from $50 million to $100 million, and 0.050% of
the Fund's average daily net assets over $100 million (subject to a minimum fee
of $2,500 per month). For the period ended February 28, 2003, Unified earned
$6,250 for administrative services.
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 these transfer agency services. For the period ended February 28,
2003, Unified earned $3,948 for transfer agency services. 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, and 0.0250% of the Fund's assets from
$100 million to $300 million, and 0.0200% of the Fund's assets over $300 million
(subject to various monthly minimum fees, the maximum being $2,100 per month for
assets of $20 million to $100 million). For the period ended February 28, 2003,
Unified earned $4,786 for fund accounting services. A Trustee and the officers
of the Trust are members of management and /or employees of Unified.
<page>
IMS Strategic Income Fund
Notes to Financial Statements
February 28, 2003 (Unaudited)
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued
The Fund retains Unified Financial Securities, Inc., ( the Distributor) a
wholly owned subsidiary of Unified Financial Services, Inc., to act as the
principal distributor of its shares. There were no payments made to the
Distributor during the period ended February 28, 2003. Timothy L. Ashburn (a
Trustee and officer of the Trust) and Thomas G. Napurano (an officer of the
Trust) are a director and officer, respectively, of the Distributor and of
Unified Financial Services, Inc. (the parent company of the Distributor), and
may be deemed to be affiliates of the Distributor.
NOTE 4. INVESTMENTS
The Fund. For the period ended February 28, 2003, purchases and sales of
investment securities, other than short-term investments, aggregated $13,599,761
and $213,848, respectively. As of February 28, 2003, the gross unrealized
appreciation for all securities totaled $73,047 and the gross unrealized
depreciation for all securities totaled $96,233 for net unrealized depreciation
of $23,186. The aggregate cost of securities for federal income tax purposes at
February 28, 2003 was $8,197,888.
NOTE 5. 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.
ELECTION OF TRUSTEES
At a special meeting of the shareholders held on December 18, 2002, a vote
was held to elect members to serve on the Board of Trustees. The vote tally for
each Trustee is as follows:
<table>
<s> <c> <c> <c> <c>
For Against Withheld Total
Timothy L. Ashburn 11,300,632.473 987.366 4,698,819.489 16,000,439.328
Daniel J. Condon 11,300,632.473 987.366 4,698,819.489 16,000,439.328
Gary E. Hippenstiel 11,300,632.473 987.366 4,698,819.489 16,000,439.328
Stephen A. Little 11,300,632.473 987.366 4,698,819.489 16,000,439.328
Ronald C. Tritschler 11,300,632.473 987.366 4,698,819.489 16,000,439.328
</table>
<page>
Item 2. Code of Ethics. Not applicable to Semi-Annual Reports.
Item 3. Audit Committee Financial Expert. Not applicable to Semi-Annual Reports.
Items 4-8. Reserved
Item 9. Controls and Procedures. Not applicable to Semi-Annual Reports for
the period ended February 28, 2003.
Item 10. Exhibits. Certifications required by Item 10(b) of Form N-CSR are
filed herewith.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).]
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Ameriprime Funds
By (Signature and Title)
* /s/ Timothy Ashburn
Timothy Ashburn, President
Date 04/15/2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)
* /s/ Timothy Ashburn
Timothy Ashburn, President
Date 04/15/2003
By (Signature and Title)
* /s/ Thomas Napurano
Thomas Napurano, Chief Financial Officer
Date 04/15/2003