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, IN 46204
(Address of principal executive offices) (Zip code)
Timothy Ashburn Unified Fund Services, Inc. 431 North Pennslyvania Street
Indianapolis, IN 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: 08/31/03
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.
Item 1. Reports to Stockholders.
<page>
Dear Fellow Shareholders, October 28, 2003
The IMS Strategic Income Fund opened on November 5, 2002, and recently
completed its first ten months of operation. The Fund has been well received by
investors. During this initial period, the Fund attracted shareholders whose
assets total $27.6 million.
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.
The Fund pays a monthly dividend and as of September 30, 2003 had a current
yield of 6.35% and an SEC 30-day yield of 6.81%. Due to recent tax law changes,
some dividend payments now receive a favorable tax treatment when compared to
interest payments. Shareholders who own the Fund in a taxable account will
benefit from this tax law change to the extent the Fund's monthly distribution
is derived from qualifying dividends as opposed to interest.
The goals of the Fund are simple. We created the Fund to fill a need - 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 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) 1. In addition, the Wall Street
Journal recently listed the IMS Capital Value Fund as one of the ten best funds
in the country for its one-year return, in its category (August 1, 2003, pg.
C12). 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've managed
our fixed income 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, with 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 put.
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 it provides us with an opportunity to outperform 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 thus far in the way of yield and total
return*, we have every confidence that we will be successful.
We thank you for the confidence you have demonstrated by investing with us.
We will be working hard over the next few years to earn your continued trust. By
our results, we hope to demonstrate that you made a smart decision.
* 16.31% Total Return Since Inception, 11/5/2002
through August 31, 2003. 16.58% Total Return Since
/s/ Carl W. Marker Inception, 11/5/2002 through September 30, 2003.
Carl W. Marker
Portfolio Manager, IMS Strategic Income Fund
1BusinessWeek magazine looked at 3,458 general stock funds from 1998 to
2002 and selected 172 to their A-list. Wall Street Journal based on Lipper data
for 12-months ended July 31, 2003, 191 mid-cap value funds.
The prospectus should be read carefully before investing. To request a
prospectus for more complete information, including charges and expenses, call
toll free 1-800-934-5550. Past performance does not guarantee future results.
Shares when redeemed may be worth more or less than their original cost.
Distributed by Unified Financial Securities, Inc.,
431 North Pennsylvania Street
Indianapolis, IN 46204
Member NASD, SIPC.
<page>
IMS Strategic Income Fund
Management Discussion
Performance -_ IMS Strategic Income Fund
The IMS Strategic Income Fund has significantly beaten its benchmark, the
Merrill Lynch US Corporate Master Index, since inception. The Fund has produced
a total return of 16.31% since its inception on November 5, 2002. As of
September 30, 2003 the current yield was 6.35% and the SEC 30-day yield was
6.81%.
The IMS Strategic Income Fund can invest in a broad array of
income-producing securities at the discretion of the Fund's advisor. It is this
flexibility that allows the advisor to position the Fund's assets in the types
of securities that are most likely to excel in a given interest rate, market or
economic cycle.
Having recognized early on that the economy was improving and that interest
rates were likely to rise, we positioned the Fund accordingly to take advantage
of the trends. Rather than weighting the fund heavily towards investment grade
bonds and treasuries, we took only small positions and chose to overweight high
yield bonds, convertible bonds, preferreds, convertible preferreds, REITS and
foreign bonds which typically outperform under such conditions. As it turned
out, the economy did strengthen and interest rates rose sharply over the summer.
We believe these trends will continue over the next few years.
Another factor that contributed to the Fund's superior performance was the
quality of the research that we conducted. During the first ten months since the
Fund's inception, we successfully identified and purchased several undervalued,
income producing securities that have appreciated significantly in addition to
providing a steady income stream for our shareholders. Motorola Equity Units
(MEU) are one example. The Fund's average cost for this security is $29.85 and
as of 8/31/2003 the price was $35.25 with a current yield of 9.93%. Another
example is Ford Preferred Stock (FprS), the Fund's average cost is $36.47. As of
8/31/2003 the price was $45.13, and the current yield was 7.20%.
Returns for the Periods Ended August 31, 2003
<table>
<s> <c> <c> <c>
Total Return
3 Month 6 Month Since Inception
Return Return (November 1, 2002)
-------------------------------
IMS Strategic Income Fund -0.53% 10.11% 16.31%
Merrill Lynch US Corp Master Index -3.63% 1.43% 8.87%
</table>
<page>
<table>
<s> <c> <c>
IMS Strategic Income Merrill Lynch US Corp Master Index
10/31/02 10,000.00 10,000.00
11/30/02 10,590.00 10,163.56
12/31/02 10,566.73 10,478.40
1/31/03 10,633.18 10,514.69
2/28/03 10,562.77 10,734.04
3/31/03 10,700.06 10,743.75
4/30/03 11,184.50 10,948.00
5/31/03 11,692.81 11,296.98
6/30/03 11,808.85 11,278.43
7/31/03 11,795.23 10,802.34
8/31/03 11,630.94 10,887.11
</table>
*This chart shows the value of a hypothetical initial investment of $10,000
in the Fund and the Merrill Lynch U.S. Corporate Master Index on November 5,
2002 (commencement of operations) and held through August 31, 2003. The Merrill
Lynch U.S. Corporate Master Index is a recognized unmanaged index of corporate
bonds. Performance figures reflect the change in value of the bonds in the
index, reflect reinvestment of interest and are not annualized. The index
returns do not reflect expenses, which have been deducted from the Fund's
return. The returns shown do not reflect deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares. THE FUND'S
RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF FUTURE RESULTS.
<page>
IMS Strategic Income Fund
Schedule of Investments
August 31, 2003
<table>
<s> <c> <c>
Common Stocks - 20.17% Shares Value
Cigarettes - 0.97%
R. J. Reynolds Tobacco Holdings, Inc. 7,800 $ 266,370
---------------
Crude Petroleum & Natural Gas - 0.97%
Kerr-McGee Corp. 6,100 268,095
---------------
Investment Advice - 4.03%
Alliance Capital Management Holding L.P. 31,400 1,111,560
---------------
Investment Companies - 2.44%
Allied Capital Corp. 26,300 672,491
---------------
National Commercial Banks - 0.95%
Bank of America Corp. 3,300 261,525
---------------
Pharmaceutical Preparations - 0.93%
Merck & Co., Inc. 5,100 256,632
---------------
Real Estate Investment Trusts - 8.92%
Chateau Communities, Inc. 21,900 650,211
Friedman Billings Ramsey Group - Class A 33,935 562,982
Gables Residential Trust 22,100 715,598
HRPT Properties Trust 58,600 531,502
---------------
2,460,293
---------------
Telephone Communications (No Radiotelephone) - 0.96%
ALLTEL Corp. 5,800 265,640
---------------
TOTAL COMMON STOCKS (Cost $5,065,797) 5,562,606
---------------
Certificate of Deposits - 1.99%
Summit Securities CD, 8.50%, 11/29/2007 250,000 250,000
Summit Securities CD, 8.50%, 12/26/2007 300,000 300,000
---------------
TOTAL CERTIFICATE OF DEPOSITS (Cost $550,000) 550,000
---------------
Convertible Preferred Stocks - 12.14%
Ameren Corp., 9.750% 28,200 789,600
Capstead Mortgage Corp., $1.26 67,000 808,690
Centurytel Inc., 6.875% 5,000 139,500
Cummins Capital Trust I, 7.000% 6,300 384,300
Ford Capital Trust II, 6.500% 14,200 640,775
Host Marriott Financial Trust, 6.750% 13,400 586,290
---------------
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $1,624,872) 3,349,155
---------------
</table>
See accompanying notes which are an integral part of the financial statements.
<page>
IMS Strategic Income Fund
Schedule of Investments - continued
August 31, 2003
<table>
<s> <c> <c>
Shares Value
Corporate Bonds - 22.26%
Akamai Technologies Subordinated Convertible Notes, Inc., 5.500%, 7/1/2007 995,000 $777,344
Goodyear Tire & Rubber Notes, 8.500%, 3/1/2007 580,000 514,750
Levi Strauss & Co. Senior Notes, 11.625%, 1/15/2008 600,000 576,000
Lucent Technologies, Inc., Medium Term Notes, 7.700%, 5/19/2010 1,060,000 816,200
Lucent Technologies, Inc., Medium Term Notes, 8.000%, 5/18/2015 165,000 117,975
Marvel Enterprises Senior Notes, 12.000%, 6/15/2009 1,400,000 1,526,000
NEXTEL Communication Senior Notes, 9.500%, 2/1/2011 100,000 110,000
Public Service Energy Senior Notes, 10.000%, 10/1/2009 660,000 693,943
Qwest Capital Funding Notes, 7.750%, 8/15/2006 340,000 319,600
Rite Aid Corp. Senior Notes, 11.250%, 7/1/2008 170,000 182,750
Service Corp. International Notes, 7.700%, 4/15/2009 500,000 503,750
--------------
TOTAL CORPORATE BONDS (Cost $5,955,232) 6,138,312
---------------
Mutual Funds - 18.11%
ACM Income Fund, Inc. 47,200 394,120
Alliance World Dollar Government Fund II, Inc. 69,000 816,960
American Strategic Income III Fund 30,700 370,549
Global High Income Dollar Fund 51,000 851,190
PIMCO Corporate Opportunity Fund 33,300 525,807
Pioneer High Yield Fund - Class A 75,072 834,053
Rydex Series - Juno Fund 54,848 1,202,827
---------------
TOTAL MUTUAL FUNDS (Cost $4,999,979) 4,995,506
---------------
Preferred Stocks - 17.52%
Hillman Group Capital Trust, 11.600% 29,700 779,625
Metropolitan Mortgage & Securities, Inc., 9.9984% (a) 118,400 2,427,200
Motorola, Inc., 7.000% 13,900 489,975
Realty Income Corp., 9.500% 22,100 587,860
Western United Holding, 8.5008% (a) 26,804 546,802
---------------
TOTAL PREFERRED STOCKS (Cost $6,772,166) 4,831,462
---------------
Money Market Securities - 5.37%
Huntington Money Market Fund Investment Shares, 0.25%, (Cost $1,480,698) (a) 1,480,698 1,480,698
---------------
TOTAL INVESTMENTS (Cost $26,448,744) - 97.56% $26,907,739
---------------
Other assets less liabilities - 2.44% 672,709
---------------
TOTAL NET ASSETS - 100.00% $27,580,448
===============
</table>
(a) Variable rate security; the coupon rate shown represents the rate at
August 31, 2003.
See accompanying notes which are an integral part of the financial statements.
<page>
IMS Strategic Income Fund
Statement of Assets and Liabilities
August 31, 2003
<table>
<s> <c>
Assets
Investments in securities, at value (cost $26,448,744) $ 26,907,739
Cash 64,373
Interest receivable 135,249
Dividends receivable 27,436
Receivable for fund shares sold 583,928
----------------
Total assets 27,718,725
-----------------
Liabilities
Accrued advisory fees 38,046
Payable for fund shares redeemed 79,364
Accrued expenses 20,867
-----------------
Total liabilities 138,277
-----------------
Net Assets $ 27,580,448
=================
Net Assets consist of:
Paid in capital 27,164,978
Accumulated undistributed net investment income (loss) 16,932
Accumulated net realized gain (loss) on investments (60,457)
Net unrealized appreciation (depreciation) on investments 458,995
-----------------
Net Assets, for 2,485,003 shares $ 27,580,448
=================
Net asset value and offering price per share $ 11.10
=================
Redemption price per share (a) $ 11.04
=================
</table>
(a) The redemption price per share reflects a redemption fee of 0.50% on
shares redeemed within 90 days of purchase.
See accompanying notes which are an integral part of the financial statements.
<page>
IMS Strategic Income Fund
Statement of Operations
Period ended August 31, 2003
<table>
<s> <c>
Investment Income
Dividend income $ 553,424
Interest income 283,939
---------------
Total Income 837,363
---------------
Expenses
Investment advisor fee 120,458
Registration expenses 17,500
Fund accounting expenses 13,800
Transfer agent expenses 11,522
Administration expenses 11,250
Auditing expenses 10,574
Legal expenses 7,254
Custodian expenses 5,239
Pricing expenses 2,500
Trustee expenses 2,290
Miscellaneous expenses 1,300
Printing expenses 1,250
Tax expenses 734
--------------
Total Expenses 205,671
Reimbursed expenses (Note 3) (17,852)
---------------
Total operating expenses 187,819
---------------
Net Investment Income (Loss) 649,544
---------------
Realized & Unrealized Gain (Loss)
Net realized gain (loss) on investment securities (66,977)
Capital gain distributions from other investment companies 6,520
Change in net unrealized appreciation (depreciation)
on investment securities 458,995
---------------
Net realized and unrealized gain (loss) on investment securities 398,538
---------------
Net increase (decrease) in net assets resulting from operations $ 1,048,082
===============
</table>
See accompanying notes which are an integral part of the financial statements.
<page>
IMS Strategic Income Fund
Statement of Changes In Net Assets
<table>
<s> <c>
Period ended
Increase (Decrease) in Net Assets Aug. 31, 2003 (a)
-----------------
Operations
Net investment income (loss) $ 649,544
Net realized gain (loss) on investment securities (60,457)
Change in net unrealized appreciation (depreciation) 458,995
-----------------
Net increase (decrease) in net assets resulting from operations 1,048,082
-----------------
Distributions
From net investment income (632,612)
From net realized gain -
-----------------
Total distributions (632,612)
-----------------
Capital Share Transactions
Proceeds from shares sold 28,991,779
Reinvestment of distributions 562,786
Amount paid for shares repurchased (2,389,587)
-----------------
Net increase (decrease) in net assets resulting
from share transactions 27,164,978
-----------------
Total Increase (Decrease) in Net Assets 27,580,448
-----------------
Net Assets
Beginning of period -
-----------------
End of period [including accumulated undistributed net
investment income of $16,932] $ 27,580,448
=================
Capital Share Transactions
Shares sold 2,651,244
Shares issued in reinvestment of distributions 51,196
Shares repurchased (217,437)
-----------------
Net increase (decrease) from capital transactions 2,485,003
=================
</table>
(a) For period of November 5, 2002 (commencement of operations) through
August 31, 2003.
See accompanying notes which are an integral part of the financial statements.
<page>
IMS Strategic Income Fund
Financial Highlights
<table>
<s> <c>
Period ended
Aug. 31, 2003 (a)
-----------------
Selected Per Share Data
Net asset value, beginning of period $ 10.00
-----------------
Income from investment operations
Net investment income (loss) 0.61
Net realized and unrealized gain (loss) 1.00
----------------
Total from investment operations 1.61
-----------------
Less Distributions to shareholders:
From net investment income (0.51)
From net realized gain 0.00
----------------
Total distributions (0.51)
-----------------
Net asset value, end of period $ 11.10
=================
Total Return 16.31% (b)
Ratios and Supplemental Data
Net assets, end of period (000) $ 27,580
Ratio of expenses to average net assets 1.96% (c)
Ratio of expenses to average net assets
before reimbursement 2.14% (c)
Ratio of net investment income to
average net assets 6.77% (c)
Ratio of net investment income to
average net assets before reimbursement 6.58% (c)
Portfolio turnover rate 18.01%
</table>
(a) For period of November 5, 2002 (commencement of operations) through
August 31, 2003.
(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 financial statements.
<page>
IMS Strategic Income
Notes to Financial Statements
August 31, 2003
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 closing price.
Lacking a last closing 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 Sub-Chapter M of 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. The Fund typically distributes substantially all net
investment income in the form of dividends to its shareholders monthly. The Fund
typically distributes substantially all net realized long term capital gains at
least annually.
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.
<page>
IMS Strategic Income Fund
Notes to Financial Statements
August 31, 2003 - continued
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 of November 5,
2002 (commencement of operations) through August 31, 2003, the Advisor earned a
fee of $120,458.
The Advisor has contractually agreed to waive all or a portion of its
management fees and/or reimburse expenses of the Fund through October 31, 2006
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%. Any waiver or reimbursement of
organizational or operating expenses by the Advisor during the period ended
August 31, 2003 is subject to repayment by the Fund within the three fiscal
years following the period ended, if the Fund is able to make the payment
without exceeding the expense limitations. For the period of November 5, 2002
(commencement of operations) through August 31, 2003, the Advisor reimbursed
expenses of $17,852.
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 of November 5, 2002 (commencement of
operations) through August 31, 2003, Unified earned $11,250 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 of November 5, 2002
(commencement of operations) through August 31, 2003, Unified earned $11,522 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 of November 5, 2002 (commencement of operations)
through August 31, 2003, Unified earned $13,800 for fund accounting services.
Certain Trustees and the officers of the Trust are members of management and
employees of Unified, and/or shareholders of Unified Financial Services, Inc.,
the parent of Unified.
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 by the Fund during the period of November 5, 2002 (commencement of
operations) through August 31, 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.
<page>
IMS Strategic Income Fund
Notes to Financial Statements
August 31, 2003 - continued
NOTE 4. INVESTMENTS
For the period of November 5, 2002 (commencement of operations) through
August 31, 2003, purchases and sales of investment securities, other than
short-term investments, aggregated $27,126,269 and $2,137,545, respectively. As
of August 31, 2003, the gross unrealized appreciation for all securities totaled
$1,299,995 and the gross unrealized depreciation for all securities totaled
$901,457 for net unrealized appreciation of $398,538. The aggregate cost of
securities for federal income tax purposes at August 31, 2003 was $26,509,201.
The difference between book cost and tax cost consists of Post-October losses in
the amount of $60,457.
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.
NOTE 6. RELATED PARTY TRANSACTIONS
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 August 31,
2003, National Financial Securities Corp. held 52.92% of the Fund in an omnibus
account for the benefit of others.
NOTE 7. DISTRIBUTION TO SHAREHOLDERS
The Fund paid monthly distributions of net investment income totaling
$0.5102 during the period of November 5, 2002 (commencement of operations)
through August 31, 2003.
The tax character of distributions paid during the period of November 5,
2002 (commencement of operations) through August 31, 2003 was as follows.
<table>
<s> <c>
Distributions paid from: 2003
---------------
Ordinary income $ 632,612
Short-term Capital Gain -
Long-term Capital Gain -
---------------
$ 632,612
===============
</table>
As of August 31, 2003, the components of distributable earnings on a tax basis
were as follows:
<table>
<s> <c>
2003
-------------
Undistributed ordinary income $ 16,932
Undistributed long-term capital gain/(accumulated losses) -
Unrealized appreciation/(depreciation) 398,538
-------------
$ 415,470
=============
</table>
The difference between book basis and tax basis unrealized depreciation
is attributable to the tax deferral of post-October losses.
TRUSTEES AND OFFICERS (Unaudited)
The Board of Trustees supervises the business activities of the Trust. Each
Trustee serves as a trustee until termination of the Trust unless the Trustee
dies, resigns, retires, or is removed.
The following table provides information regarding each Trustee who is an
"interested person" of the Trust, as defined in the Investment Company Act of
1940, and each officer of the Trust.
<table>
<s> <c> <c> <c>
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
Number of
Name, Age and Address Position(s) Held with the Fund Complex1 Length of Time Served Portfolios in Fund
Complex1 Overseen
by Trustee
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
Timothy Ashburn2 President, Secretary and Trustee President and Secretary since 24
October 2002; Trustee of
c/o Unified Fund Services, AmeriPrime Advisors Trust since
Inc. November 2002, AmeriPrime Funds
431 N. Pennsylvania St. since December 2002, and Unified
Indianapolis, IN 46204 Series Trust since October 2002
Year of Birth: 1950
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
</table>
<table>
<s> <c>
- ---------------------------------------------------------------------- --------------------------------------------------------
Principal Occupations During Past 5 Years Other Directorships Held by Trustee
- ---------------------------------------------------------------------- --------------------------------------------------------
- ---------------------------------------------------------------------- --------------------------------------------------------
Chairman of Unified Financial Services, Inc. since 1989 and Chief Unified Financial Services, Inc.
Executive Officer from 1989 to 1992 and 1994 to April 2002; since 1989
President of Unified Financial Services from November 1997 to April
2000.
- ---------------------------------------------------------------------- --------------------------------------------------------
</table>
<table>
<s> <c> <c> <c>
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
Number of
Name, Age and Address Position(s) Held with the Fund Complex1 Length of Time Served Portfolios in Fund
Complex1 Overseen
by Trustee
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
Ronald C. Tritschler3 Trustee Trustee of AmeriPrime Funds and 24
Unified Series Trust since
c/o Unified Fund Services, December 2002 and AmeriPrime
Inc. Advisors Trust since November 2002
431 N. Pennsylvania St.
Indianapolis, IN 46204
Year of Birth: 1952
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
</table>
<table>
<s> <c>
- ---------------------------------------------------------------------- --------------------------------------------------------
Principal Occupations During Past 5 Years Other Directorships Held by Trustee
- ---------------------------------------------------------------------- --------------------------------------------------------
- ---------------------------------------------------------------------- --------------------------------------------------------
Chief Executive Officer, Director and legal counsel of The Webb None
Companies, a national real estate company, from 2001 to present;
Executive Vice President and Director of The Webb Companies from
1990 to 2000; Director, The Lexington Bank, from 1998 to present;
Director, Vice President and legal counsel for The Traxx Companies,
an owner and operator of convenience stores, from 1989 to present.
- ---------------------------------------------------------------------- --------------------------------------------------------
</table>
<table>
<s> <c> <c> <c>
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
Position(s) Held with the Fund Complex1 Length of Time Served Number of
Name, Age and Address Portfolios in Fund
Complex1 Overseen
by Trustee
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
Thomas G. Napurano Treasurer and Chief Financial Officer Since October 2002 for AmeriPrime N/A
Funds and AmeriPrime Advisors
c/o Unified Fund Services, Trust; since December 2002 for
Inc. Unified Series Trust
431 N. Pennsylvania St.
Indianapolis, IN 46204
Year of Birth: 1941
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
</table>
<table>
<s> <c>
- ---------------------------------------------------------------------- --------------------------------------------------------
Principal Occupations During Past 5 Years Other Directorships Held by Trustee
- ---------------------------------------------------------------------- --------------------------------------------------------
- ---------------------------------------------------------------------- --------------------------------------------------------
Chief Financial Officer and Executive Vice President of Unified N/A
Financial Services, Inc., the parent company of the Trust's
administrator and principal underwriter; member of the board of
directors of Unified Financial Services, Inc. from 1989 to March
2002.
- ---------------------------------------------------------------------- --------------------------------------------------------
</table>
<table>
<s> <c> <c> <c>
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
Number of
Name, Age and Address Position(s) Held Length of Time Served Portfolios
with Trust in Fund Complex1
Overseen by Trustee
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
Carol Highsmith Assistant Secretary Since October 2002 for AmeriPrime N/A
Funds and Ameriprime Advisors
c/o Unified Fund Services, Trust; since December 2002 for
Inc. Unified Series Trust
431 N. Pennsylvania St.
Indianapolis, IN 46204
Year of Birth: 1964
- ----------------------------- ---------------------------------------- ----------------------------------- --------------------
</table>
<table>
<s> <c>
- ---------------------------------------------------------------------- --------------------------------------------------------
Principal Occupations During Past 5 Years Other Directorships Held
- ---------------------------------------------------------------------- --------------------------------------------------------
- ---------------------------------------------------------------------- --------------------------------------------------------
Employed by Unified Fund Services, Inc. (November 1994 to present); None
Vice President and Asst. Secretary of Lindbergh Funds; Asst.
Secretary of AmeriPrime Funds and AmeriPrime Advisors Trust (October
2002 to present).
- ---------------------------------------------------------------------- --------------------------------------------------------
</table>
1 The term "Fund Complex" refers to AmeriPrime Funds, AmeriPrime Advisors
Trust, and Unified Series Trust.
2 Mr. Ashburn is an "interested person" of the Trust because he is an
officer of the Trust. In addition, he may be deemed to be an "interested person"
of the Trust because he is Chairman and a director of Unified Financial
Securities, Inc., the principal underwriter for certain funds in the Fund
Complex.
3 Mr. Tritschler may be deemed to be an "interested person" of the Trust
because he has an ownership interest in Unified Financial Services, Inc., the
parent of the principal underwriter for certain funds in the Fund Complex.
<page>
The following table provides information regarding each Trustee who is not
an "interested person" of the Trust, as defined in the Investment Company Act of
1940.
<table>
<s> <c> <c> <c>
- ------------------------------ ---------------------------------- ----------------------- -------------------------
Name, Age and Address Position(s) Held with the Fund Length of Time Served Number of Portfolios in
Complex1 Fund Complex1 Overseen
by Trustee
- ------------------------------ ---------------------------------- ----------------------- -------------------------
- ------------------------------ ---------------------------------- ----------------------- -------------------------
Gary E. Hippenstiel Trustee Trustee of AmeriPrime 24
Funds since 1995,
c/o Unified Fund Services, AmeriPrime Advisors
Inc. Trust since July 2002
431 N. Pennsylvania St. and Unified Series
Indianapolis, IN 46204 Trust since December
2002
Year of Birth: 1947
- ------------------------------ ---------------------------------- ----------------------- -------------------------
</table>
<table>
<s> <c>
- ----------------------------------------------------------------- -------------------------------------------------
Principal Occupations During Past 5 Years Other Directorships Held by Trustee
- ----------------------------------------------------------------- -------------------------------------------------
- ----------------------------------------------------------------- -------------------------------------------------
Director, Vice President and Chief Investment Officer of Legacy None
Trust Company, N.A. since 1992.
- ----------------------------------------------------------------- -------------------------------------------------
</table>
<table>
<s> <c> <c> <c>
- ------------------------------ ---------------------------------- ----------------------- -------------------------
Position(s) Held Length of Time Served Number of Portfolios in
Name, Age and Address with the Fund Complex1 Fund Complex1
Overseen by Trustee
- ------------------------------ ---------------------------------- ----------------------- -------------------------
- ------------------------------ ---------------------------------- ----------------------- -------------------------
Stephen A. Little Trustee Trustee of AmeriPrime 24
Funds and Unified
c/o Unified Fund Services, Series Trust since
Inc. December 2002 and
431 N. Pennsylvania St. AmeriPrime Advisors
Indianapolis, IN 46204 Trust since November
2002
Year of Birth: 1946
- ------------------------------ ---------------------------------- ----------------------- -------------------------
</table>
<table>
<s> <c>
- ----------------------------------------------------------------- -------------------------------------------------
Principal Occupations During Past 5 Years Other Directorships Held by Trustee
- ----------------------------------------------------------------- -------------------------------------------------
- ----------------------------------------------------------------- -------------------------------------------------
President and founder, The Rose, Inc., a registered investment None
advisor, since April 1993.
- ----------------------------------------------------------------- -------------------------------------------------
</table>
<table>
<s> <c> <c> <c>
- ------------------------------ ---------------------------------- ----------------------- -------------------------
Position(s) Held with the Fund Number of Portfolios in
Name, Age and Address Complex1 Length of Time Served Fund Complex1 Overseen
by Trustee
- ------------------------------ ---------------------------------- ----------------------- -------------------------
- ------------------------------ ---------------------------------- ----------------------- -------------------------
Daniel Condon Trustee Trustee of AmeriPrime 24
Funds and Unified
c/o Unified Fund Services, Series Trust since
Inc. December 2002 and
431 N. Pennsylvania St. AmeriPrime Advisors
Indianapolis, IN 46204 Trust since November
2002
Year of Birth: 1950
- ------------------------------ ---------------------------------- ----------------------- -------------------------
</table>
<table>
<s> <c>
- ----------------------------------------------------------------- -------------------------------------------------
Principal Occupations During Past 5 Years Other Directorships Held by Trustee
- ----------------------------------------------------------------- -------------------------------------------------
- ----------------------------------------------------------------- -------------------------------------------------
Vice President and General Manager, International Crankshaft None
Inc., an automotive equipment manufacturing company, 1990 to
present; Trustee, The Unified Funds, from 1994 to 2002;
Trustee, Star Select Funds, a REIT mutual fund, from 1997 to
2000.
- ----------------------------------------------------------------- -------------------------------------------------
</table>
1 The term "Fund Complex" refers to AmeriPrime Funds, AmeriPrime Advisors
Trust and Unified Series Trust.
PROXY VOTING
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities is available
without charge, upon request: (1) by calling the Fund at (800) 934-5550; (2) on
the Fund's website at www.ameriprime.com; and (3) on the SEC's website at
www.sec.gov.
<page>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Trustees
IMS Strategic Income Fund
(a series of AmeriPrime Funds)
We have audited the accompanying statement of assets and liabilities of IMS
Strategic Income Fund, including the schedule of portfolio investments, as of
August 31, 2003, and the related statement of operations, changes in net assets,
and the financial highlights for the period of November 5, 2002 (commencement of
operations) through August 31, 2003 in the period then ended. 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 auditing standards generally
accepted in the United States of America. 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 August 31, 2003 by correspondence with the
custodian. 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 IMS
Strategic Income Fund as of August 31, 2003, the results of its operations, the
changes in its net assets and the financial highlights for the period of
November 5, 2002 (commencement of operations) through August 31, 2003 in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America.
/s/ McCurdy & Associates CPA's, Inc.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
September 11, 2003
<page>
Item 2. Code of Ethics.
(a) As of the end of the period covered by this report, the registrant has
adopted a code of ethics that applies to the registrant's principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party.
(b) For purposes of this item, "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in reports
and documents that a registrant files with, or submits to, the Commission and in
other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) Amendments:
During the period covered by the report, there have not been any amendments
to the provisions of the code of ethics.
(d) Waivers:
During the period covered by the report, the registrant has not granted any
express or implicit waivers from the provisions of the code of ethics.
Item 3. Audit Committee Financial Expert.
(a) The registrant's Board of Trustees has determined that the registrant
does not have an audit committee financial expert. The committee members and the
full Board considered the possibility of adding a member that would qualify as
an expert. The audit committee determined that, although none of its members
meet the technical definition of an audit committee financial expert, the
committee has sufficient financial expertise to adequately perform its duties
under the Audit Committee Charter without the addition of a qualified expert.
Item 4. Principal Accountant Fees and Services. Not applicable
<page>
Item 5. Audit Committee of Listed Companies. Not applicable.
[Applies to listed companies only.]
Item 6. Reserved.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds.
Not applicable.
Item 8. Reserved.
Item 9. Controls and Procedures.
(a) Based on an evaluation of the registrant's disclosure controls and
procedures as of September 30, 2003, the disclosure controls and procedures are
reasonably designed to ensure that the information required in filings on Forms
N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b) There were no significant changes in the registrant's internal control
over financial reporting that occurred during the registrant's last fiscal
half-year that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
Item 10. Exhibits.
(a)(1) Code is filed herewith.
(a)(2) Certifications required by Item 10(a)(2) of Form N-CSR are filed
herewith.
(b) Certification required by Item 10(b) of Form N-CSR is filed herewith.
<page>
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 /s/ Timothy Ashburn
Timothy Ashburn, President
Date 10/28/03
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 /s/ Timothy Ashburn
Timothy Ashburn, President
Date 10/28/03
By /s/ Thomas G. Napurano
Thomas Napurano, Treasurer and Chief Financial Officer
Date 10/29/03