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 N. Pennsylvania St.
Indianapolis, IN 46204
(Address of principal executive offices) (Zip code)
Lynn Wood
Unified Fund Services, Inc.
431 N. Pennsylvania St.
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: 06/30
Date of reporting period: 06/30/04
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.
[logo] IMS Capital Management, Inc.
----------------------------
Building Wealth Wisely
IMS Capital Value Fund
ANNUAL REPORT IMS Strateic Income Fund
June 30, 2004 IMS Strategic Allocation Fund
www.imscapital.com 8995 S.E. Otty Road, Portland, Oregon 97266
Registered Investment Advisors (503) 788-4200
since 1988
<page>
Letter to Shareholders
Dear Fellow Shareholders:
We are pleased to present the annual report for the IMS family of no load funds.
This report covers the financial results and investment activity for IMS Capital
Value Fund and IMS Strategic Allocation Fund for the 12 months ended June 30,
2004, and IMS Strategic Income Fund for the 10 months ended June 30, 2004.
The Funds Continue to Grow
The last calendar year saw the end of a remarkable rally in the stock market
following three calendar years of negative returns. Our equity funds, the IMS
Capital Value Fund and the IMS Strategic Allocation Fund, participated in this
rally and continued to hold their own when the market began to consolidate in
January.
Since the beginning of 2004, IMS Capital Value Fund net assets have grown by $30
million or 50%, due to a combination of positive investment results and
additional shareholder purchases. The Fund was featured in several prominent
industry publications during the period, including the February 2, 2004 issue of
Forbes, as well as BusinessWeek online, and the June issue of Money, which
recognized the Fund as one of the ten best performing mid cap funds for the
three years ended April 8, 2004 (#9 out of 1,079 funds, based on total return).
The IMS Strategic Allocation Fund net assets have grown by $9 million or 80%
since the beginning of 2004 as its unique strategy gained favor with investors
seeking professional, active allocation of their assets.
The IMS Strategic Income Fund net assets grew by $10 million or 24% during the
period as more investors seeking higher yields invested in the Fund. We believe
this Fund is well-positioned for higher interest rates in the coming fiscal
year.
The Backdrop for Performance
Economically, the period was marked by escalating oil prices, conflict in Iraq,
fears of rising rates and inflation concerns. The broad stock market, as
measured by the S&P 500, returned 3.44% for the six months and 19.11% for the
year ending June 30. Small stocks fared better with the Russell 2000 posting a
return of 6.76% for the six months and 33.37% for the year. Although small and
mid cap stocks clearly led the rally, which started in March 2003, they were the
first to stumble as the market consolidated. However, we believe small and mid
cap stocks will resume their leadership when the equity markets advance.
In the meantime, the Federal Reserve Board raised rates a quarter point during
its June 30th meeting. Long priced into the market, the 0.25% rate hike prompted
the S&P 500 to jump the same day and bond yields actually declined, leading us
to believe that short-term rates will reflect the bulk of the Fed hike, and
long-term rates will remain stable to slightly higher in coming months.
As we head into a presidential election, we believe that the market will improve
as earnings estimates have been rising and we think there is more good news in
store. We continue to manage the Funds for superior risk adjusted investment
results and we are optimistic that long-term investors in the Funds will be
rewarded.
The following pages contain a detailed discussion about the activity in each
fund over the last year. If you have any questions about the Funds or your
account with us, please do not hesitate to call Shareholder Services at
1-800-934-5550. As always, we thank you for your continuing confidence and trust
in IMS Capital Management.
Sincerely,
/s/ Carl Marker /s/ Arthur Nunes
Carl W. Marker Arthur G. Nunes
Portfolio Manager Portfolio Manager
1
<page>
Management's Discussion and Analysis
IMS Capital Value Fund
For the 12 months ended June 30, 2004, the IMS Capital Value Fund gained 31.46%
compared to the Russell MidCap Value Index, which gained 30.81%. During the
period, the Fund continued to maintain broad exposure to the major equity market
sectors, and we worked diligently to put new cash flow to work in undervalued
mid cap stocks showing signs of positive momentum.
As part of our strategy during the period, we increased the Fund's health care
position with the addition of LifePoint Hospitals. Established in 1999 as a
spin-off of HCA - The Healthcare Company, LifePoint owns and operates general
acute care hospitals located in growing non-urban areas. In most cases, the
LifePoint facility is the only hospital in the community.
In other additions to the Fund, we initiated a position in Equifax, as a
combination financial services and information technology play. With a 100+ year
history, Equifax enables and secures global commerce through information
management and marketing services, serving customers across a wide range of
industries including the financial services, retail, healthcare,
telecommunications/utilities, brokerage, insurance and government industries.
Equifax also helps consumers to manage and protect their financial health
through credit scoring and reporting services.
In other activity, we added to our financial services holdings with a new
position in CheckFree. CheckFree is a leading provider of financial electronic
commerce services and products and has relationships with financial
institutions, Web portals and organizations that issue regular bills or
statements, which give consumers the ability to receive and pay bills online.
Existing positions that contributed to fund performance included CenturyTel in
the telecommunications area, which underperformed early in the period, but was
later upgraded by analysts in the second quarter and its price increased
significantly as a result.
Sectors contributing positively to the Fund during the period included energy
(due to rising oil prices) and basic materials and capital goods, which
benefited from strong manufacturing activity as the economy improved.
Areas that caused the Fund to give back some of its gains included health care,
where Watson Pharmaceuticals announced a management change and an earnings
warning. The financial sector did not hold up well toward the end of the period,
and a couple of our financial stocks missed their earnings projections,
including E*Trade.
Lastly, in the technology sector, our LSI Logic holding suffered after it warned
of lower sales.
Looking ahead, we believe that the stock market will slowly digest lingering
uncertainties about Iraq, interest rates and the upcoming presidential election
as it gains confidence about generally positive earnings reports. In this
environment, we will work hard to find those undervalued mid cap stocks whose
fundamentals are actively recovering.
Thank you for your investment in IMS Capital Value Fund.
/s/ Carl Marker
Carl W. Marker
Portfolio Manager
2
<page>
Investment Results
Average Annual Total Returns
(for periods ended June 30, 2004)
Since Inception
One Year Five Year (August 5, 1996)
------------ ------------ ----------------
IMS Capital Value Fund* 31.46% 11.17% 13.23%
Russell Mid-Cap Value Index** 30.81% 8.62% 12.98%
The performance quoted represents past performance, which does not
guarantee 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. The returns shown do not reflect
deduction of taxes that a shareholder would pay on Fund distributions or the
redemption of Fund shares. Current performance of the Fund may be lower or
higher than the performance quoted. The Fund's investment objectives, risks,
charges and expenses must be considered carefully before investing. Performance
data current to the most recent month end may be obtained by calling
1-800-934-5550.
* Return figures reflect any change in price per share and assume the
reinvestment of all distributions.
** The Index is an unmanaged benchmark that assumes reinvestment of all
distributions and excludes the effect of taxes and fees. The Russell Mid-Cap
Value Index is a widely recognized unmanaged index of equity prices and is
representative of a broader market and range of securities than is found in the
Fund's portfolio. Individuals cannot invest directly in the Index, however, an
individual can invest in ETF's or other investment vehicles that attempt to
track the performance of a benchmark index.
Comparison of the Growth of a $10,000 Investment in the IMS Capital Value Fund
and the Russell Mid-Cap Value Index
IMS Capital Russell Mid-Cap
Value Fund Value Index
($26,643) ($26,250)
8/5/96 10,000.00 10,000.00
6/30/97 12,450.00 13,071.39
6/30/98 13,235.11 16,437.28
6/30/99 15,692.44 17,362.08
6/30/00 16,695.52 15,989.03
6/30/01 17,315.89 19,814.44
6/30/02 17,134.49 20,195.33
6/30/03 20,267.05 20,066.61
6/30/04 26,642.78 26,249.72
The chart above assumes an initial investment of $10,000 made on August 5, 1996
(commencement of Fund operations) and held through June 30, 2004. THE FUND'S
RETURN REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The
returns shown do not reflect deduction of taxes that a shareholder would pay on
Fund distributions or the redemption of Fund shares. Investment returns and
principal values will fluctuate so that your shares, when redeemed, may be worth
more or less than their original purchase price.
3
<page>
IMS Strategic Allocation Fund
For the 12 months ended June 30, 2004, the IMS Strategic Allocation Fund gained
17.60% compared to the S&P 500's gain of 19.09%. The Fund's strategy for the
period was to maintain broad exposure to the equity market with particular
emphasis in small and mid-cap stocks, which led the market rally. However, when
the market began to consolidate in January, small and mid-cap stocks led the
way, which contributed to the Fund's underperformance during the period.
The Fund also maintained overweighted positions in specific sectors (technology,
oil, banking) up until the second calendar quarter, when they were sold off. Our
reasoning for concentrating in these individual sectors is that they tend to
outperform the broader market when the market is advancing. We trim back if the
market retreats, because individual sectors can be more volatile in such
climates.
In addition, we are maintaining some exposure to Japan and Asia on the positive
news coming out of their economies. We believe the domestic equity market will
resume its forward momentum as investors focus on an improving economy and
accelerating corporate profits. In addition, the Fund continues to overweight
small and mid-cap stocks, because we believe they will be among the strongest
performers once the market resumes its advance.
Thank you for your investment in IMS Strategic Allocation Fund.
/s/ Arthur Nunes /s/ Carl Marker
Arthur G. Nunes Carl W. Marker
Co-Portfolio Manager Co-Portfolio Manager
4
<page>
Investment Results
Average Annual Total Returns
(for periods ended June 30, 2004)
Since Inception
One Year (November 5, 2002)
-------------- ----------------------
IMS Strategic Allocation Fund* 17.60% 13.93%
S&P 500 Index** 19.09% 16.30%
The performance quoted represents past performance, which does not guarantee
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. The returns shown do not reflect deduction of taxes
that a shareholder would pay on Fund distributions or the redemption of Fund
shares. Current performance of the Fund may be lower or higher than the
performance quoted. The Fund's investment objectives, risks, charges and
expenses must be considered carefully before investing. Performance data current
to the most recent month end may be obtained by calling 1-800-934-5550.
* Return figures reflect any change in price per share and assume the
reinvestment of all distributions.
** The Index is an unmanaged benchmark that assumes reinvestment of all
distributions and excludes the effect of taxes and fees. The S&P 500 Index is a
widely recognized unmanaged index of equity prices and is representative of a
broader market and range of securities than is found in the Fund's portfolio.
Individuals cannot invest directly in the Index, however, an individual can
invest in ETF's or other investment vehicles that attempt to track the
performance of a benchmark index.
Comparison of the Growth of a $10,000 Investment in the IMS Strategic Allocation
Fund and the S&P 500 Index
IMS Strategic S&P 500
Allocation Fund Index
($12,419) ($12,834)
11/5/02 10,000.00 10,000.00
12/31/02 9,660.00 9,643.31
3/31/03 9,070.00 9,339.62
6/30/03 10,560.00 10,776.57
9/30/03 10,750.00 11,061.79
12/31/03 12,105.81 12,406.71
3/31/04 12,560.16 12,616.69
6/30/04 12,418.81 12,833.59
The chart above assumes an initial investment of $10,000 made on November 5,
2002 (commencement of Fund operations) and held through June 30, 2004. THE
FUND'S RETURN REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS.
The returns shown do not reflect deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares. Investment returns and
principal values will fluctuate so that your shares, when redeemed, may be worth
more or less than their original purchase price.
5
<page>
IMS Strategic Income Fund
During the 10 months ended June 30, 2004, the IMS Strategic Income Fund posted a
return of 0.33%, compared to its benchmark, the Merrill Lynch US Corporate
Master Index, which posted 4.10% for the same period.
The threat of rising interest rates held back several holdings in the Fund
during the period. After a long, profitable run, for instance, REITs declined on
interest rate concerns, and therefore, we sold them. We also sold our
investment-grade bonds and closed end bond funds, which are more sensitive to
rising rates, and our exposure to them contributed to the Fund's
underperformance. Additionally, we trimmed our preferred stocks, except for a
few that have relatively high coupons.
Proceeds from the sale of these securities were redeployed into high yield
bonds, oil royalty trusts and business trusts. Business trusts are similar to
REITs, in that they are required to pay out most of their income to investors,
but they do not pose the same interest rate risk.
Lastly, we increased our weighting in high dividend common stocks. We continued
to write covered calls on most of our stock holdings to generate additional
income.
We believe these portfolio changes have positioned the Fund for a gradually
rising interest rate environment, as we are focused on delivering high,
consistent income to shareholders.
Thank you for your investment in IMS Strategic Income Fund.
/s/ Carl Marker
Carl W. Marker
Portfolio Manager
6
<page>
Investment Results
Average Annual Total Returns
(for periods ended June 30, 2004)
Ten Months Since Inception
(9/1/03-6/30/04) One Year (November 5, 2002)
------------------ ---------- -------------------
IMS Strategic Income Fund* 0.33% -1.18% 9.74%
Merrill Lynch US Corporate
Master Index** 4.10% 0.49% 7.82%
The performance quoted represents past performance, which does not guarantee
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. The returns shown do not reflect deduction of taxes
that a shareholder would pay on Fund distributions or the redemption of Fund
shares. Current performance of the Fund may be lower or higher than the
performance quoted. The Fund's investment objectives, risks, charges and
expenses must be considered carefully before investing. Performance data current
to the most recent month end may be obtained by calling 1-800-934-5550.
* Return figures reflect any change in price per share and assume the
reinvestment of all distributions.
** The Index is an unmanaged benchmark that assumes reinvestment of all
distributions and excludes the effect of taxes and fees. The Merrill Lynch US
Corporate Master Index is a widely recognized unmanaged index of fixed income
prices and is representative of a broader market and range of securities than is
found in the Fund's portfolio. Individuals cannot invest directly in the Index,
however, an individual can invest in ETF's or other investment vehicles that
attempt to track the performance of a benchmark index.
Comparison of the Growth of a $10,000 Investment in the IMS Strategic Income
Fund and the Merrill Lynch US Corporate Master Index
IMS Strategic Merrill Lynch US
Income Fund Corporate Master Index
($11,669) ($11,334)
11/5/02 10,000.00 10,000.00
12/31/02 10,566.73 10,478.40
3/31/03 11,700.06 10,743.75
6/30/03 11,808.85 11,278.43
9/30/03 11,657.77 11,275.73
12/31/03 11,946.13 11,349.15
3/31/04 12,093.05 11,723.70
6/30/04 11,669.08 11,333.77
The chart above assumes an initial investment of $10,000 made on November 5,
2002 (commencement of Fund operations) and held through June 30, 2004. THE
FUND'S RETURN REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS.
The returns shown do not reflect deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares. Investment returns and
principal values will fluctuate so that your shares, when redeemed, may be worth
more or less than their original purchase price.
7
<page>
IMS Funds
IMS Capital Value Fund
Schedule of Investments
June 30, 2004
<table>
<s> <c> <c>
Common Stocks - 99.33% Shares Value
------------------ ----------------------
Aerospace Technologies - 2.03%
Alliant Techsystems, Inc. (a) 28,300 $ 1,792,522
----------------------
Banks & Financial Services - 10.67%
First Horizon National Corp. 34,100 1,550,527
Huntington Bancshares, Inc. 128,700 2,947,230
T. Rowe Price Associates, Inc. 27,000 1,360,800
A.G. Edwards, Inc. 45,000 1,531,350
E*Trade Group, Inc. (a) 184,100 2,052,715
----------------------
9,442,622
----------------------
Chemicals - 4.45%
Monsanto Company 42,900 1,651,650
Cytec Industries, Inc. 50,200 2,281,590
----------------------
3,933,240
----------------------
Communications - 5.90%
XM Satellite Radio Holdings, Inc. - Class A (a) 28,900 788,681
Harris Corp. 29,200 1,481,900
Centurytel, Inc. 65,900 1,979,636
Sprint Corp. 55,200 971,520
----------------------
5,221,737
----------------------
Computer Related Services & Equipment - 12.71%
CheckFree Corp. (a) 27,300 819,000
Computer Sciences Corp. (a) 77,700 3,607,611
Convergys Corp. (a) 81,300 1,252,020
Unisys Corp. (a) 209,200 2,903,696
SunGard Data Systems, Inc. (a) 60,400 1,570,400
Amdocs Ltd. (a) 46,700 1,094,181
----------------------
11,246,908
----------------------
Electrical Components - 3.29%
American Power Conversion, Inc. 48,000 943,200
LSI Logic Corp. (a) 258,600 1,970,532
----------------------
2,913,732
----------------------
Energy - 4.68%
Great Plains Energy, Inc. 52,600 1,562,220
Amerada Hess Corp. 32,600 2,581,594
----------------------
4,143,814
----------------------
Food & Beverage - 12.79%
PepsiAmericas, Inc. 108,200 2,298,168
Adolph Coors Company 41,000 2,965,940
Tyson Foods, Inc. 288,900 6,052,455
----------------------
11,316,563
----------------------
Healthcare - 13.76%
Humana, Inc. (a) 121,600 2,055,040
PacifiCare Health Systems, Inc. (a) 64,600 2,497,436
Gentiva Health Services, Inc. (a) 103,900 1,689,414
LifePoint Hospitals, Inc. (a) 46,000 1,712,120
Manor Care, Inc. 62,100 2,029,428
Apria Healthcare Group, Inc. (a) 76,300 2,189,810
----------------------
12,173,248
----------------------
</table>
See accompanying notes which are an integral part of the financial statements.
8
<page>
IMS Funds
IMS Capital Value Fund
Schedule of Investments - continued
June 30, 2004
<table>
<s> <c> <c>
Common Stocks - 99.33% - continued Shares Value
------------------ ----------------------
Insurance - 10.42%
Aon Corp. 87,800 $ 2,499,666
Lincoln National Corp. 59,100 2,792,475
Loews Corp. 21,300 1,277,148
Nationwide Financial Services, Inc. - Class A 70,400 2,647,744
----------------------
9,217,033
----------------------
Miscellaneous Furniture & Fixtures - 1.51%
Hillenbrand Industries, Inc. 22,100 1,335,945
----------------------
Personal Services - 8.73%
Cendant Corp. 28,000 685,440
Equifax, Inc. 69,200 1,712,700
H & R Block, Inc. 31,600 1,506,688
Service Corporation International (a) 518,300 3,819,871
----------------------
7,724,699
----------------------
Pharmaceutical Goods - 4.63%
King Pharmaceuticals, Inc. (a) 150,700 1,725,515
Watson Pharmaceuticals, Inc. (a) 31,200 839,280
Bausch & Lomb, Inc. 23,500 1,529,145
----------------------
4,093,940
----------------------
Refuse Systems - 1.69%
Republic Services, Inc. 51,700 1,496,198
----------------------
Retail - 2.07%
Schein Henry, Inc. (a) 7,000 441,980
Rite Aid Corp. (a) 266,000 1,388,520
----------------------
1,830,500
----------------------
TOTAL COMMON STOCKS (Cost $74,899,803) 87,882,701
----------------------
Preferred Stocks - 0.00%
Metropolitan Mortgage & Securities, 9.99% (b) 25,000 -
----------------------
TOTAL PREFERRED STOCKS (Cost $482,325) -
----------------------
Money Market Securities - 0.80%
First American Prime Obligations Fund, 0.87% (c) 704,895 704,895
----------------------
TOTAL MONEY MARKET SECURITIES (Cost $704,895) 704,895
----------------------
TOTAL INVESTMENTS (Cost $76,087,023) - 100.13% $ 88,587,596
----------------------
Liabilities in excess of other assets - (0.13)% (112,184)
----------------------
TOTAL NET ASSETS - 100.00% $ 88,475,412
======================
</table>
(a) Non-income producing.
(b) Security valued at zero due to bankruptcy.
(c) Variable rate security; the coupon rate shown represents the rate at
June 30, 2004.
See accompanying notes which are an integral part of the financial statements.
9
<page>
IMS Funds
IMS Strategic Allocation Fund
Schedule of Investments
June 30, 2004
<table>
<s> <c> <c>
Exchange Traded Funds - 61.69% Shares Value
------------------ ----------------------
iShares S&P MidCap 400 / BARRA Growth Index Fund 6,000 $ 748,740
iShares S&P MidCap 400 / BARRA Value Index Fund 6,400 747,200
iShares MSCI Japan Index Fund 85,000 902,700
iShares S&P 500 / BARRA Value Index Fund 9,100 521,794
iShares S&P SmallCap 600 / BARRA Value Index Fund 8,700 954,390
iShares S&P SmallCap 600 / BARRA Growth Index Fund 9,800 956,382
iShares S&P 500 / BARRA Growth Index Fund 8,700 494,334
iShares MSCI Pacific ex-Japan Index Fund 5,200 380,692
Rydex S&P Equal Weight ETF 47,300 6,761,535
----------------------
TOTAL EXCHANGE TRADED FUNDS (Cost $11,740,063) 12,467,767
----------------------
Mutual Funds - 24.10%
Rydex Series - Biotechnology Fund 41,347 834,802
Rydex Series Trust - Nova Fund 77,805 1,919,451
Rydex Series - Medius Fund 29,304 833,114
Rydex Series - Mekros Fund 48,801 1,284,445
----------------------
TOTAL MUTUAL FUNDS (Cost $4,775,000) 4,871,812
----------------------
Money Market Securities - 12.98%
First American Prime Obligations Fund, 0.87% (a) 2,624,269 2,624,269
----------------------
TOTAL MONEY MARKET SECURITIES (Cost $2,624,269) 2,624,269
----------------------
TOTAL INVESTMENTS (Cost $19,139,332) - 98.77% $ 19,963,848
----------------------
Other assets in excess of liabilities - 1.23% 248,608
----------------------
TOTAL NET ASSETS - 100.00% $ 20,212,456
======================
</table>
(a) Variable rate security; the coupon rate shown represents the yield at June
30, 2004.
See accompanying notes which are an integral part of the financial statements.
10
<page>
IMS Funds
IMS Strategic Income Fund
Schedule of Investments
June 30, 2004
<table>
<s> <c> <c>
Common Stocks - 26.39% Shares Value
------------------ ----------------------
Automotive Parts - 1.05%
Genuine Parts Company (a) 13,600 $ 539,648
----------------------
Tobacco Products - 0.92%
UST, Inc. (a) 13,100 471,600
----------------------
Chemicals - 0.97%
Olin Corp. (a) 28,200 496,884
----------------------
Crude Petroleum & Natural Gas - 7.02%
Enterprise Products Partners LP (a) 33,900 720,375
Hugoton Royalty Trust 35,500 811,530
Pengrowth Energy Trust 54,000 754,920
Provident Energy Trust 91,600 706,236
Petrofund Energy Trust 54,550 609,323
----------------------
3,602,384
----------------------
Firearms - 1.01%
Sturm, Ruger & Company, Inc. (a) 43,000 520,730
----------------------
Investment Advice - 3.71%
Alliance Capital Management Holding LP (a) 31,400 1,066,030
JPMorgan Chase & Co. (a) 21,600 837,432
----------------------
1,903,462
----------------------
Food & Beverage - 3.21%
ConAgra Foods, Inc. (a) 26,800 725,744
H.J. Heinz Company (a) 23,500 921,200
----------------------
1,646,944
----------------------
Pharmaceutical Preparations - 1.60%
Bristol-Myers Squibb Co. (a) 33,400 818,300
----------------------
Packaging Products - 2.10%
Chesapeake Corp. (a) 21,400 570,952
Tupperware Corp. (a) 26,200 509,066
----------------------
1,080,018
----------------------
Services - 3.05%
R.R. Donnelly & Sons Company (a) 16,600 548,132
GATX Corp. 19,000 516,800
The ServiceMaster Company (a) 40,700 501,424
----------------------
1,566,356
----------------------
Telephone Communications - 1.75%
SBC Communications, Inc. (a) 37,100 899,675
----------------------
TOTAL COMMON STOCKS (Cost $13,810,986) 13,546,001
----------------------
</table>
See accompanying notes which are an integral part of the financial statements.
11
<page>
IMS Funds
IMS Strategic Income Fund
Schedule of Investments - Continued
June 30, 2004
<table>
<s> <c> <c>
Shares Value
------------------ ----------------------
Preferred Securities - 8.14%
Ameren Corp., 9.750% 43,000 $ 1,144,875
AES Trust III, 6.750% 11,500 493,063
Electronic Data Systems Corp., 7.625% 55,400 948,725
Hillman Group Capital Trust, 11.600% 29,700 801,900
United Rentals Trust, 6.500% 11,500 506,000
Metropolitan Mortgage & Securities, Inc., 9.9984% (b) 118,400 -
Western United Holding, 8.5008% (c) 26,804 284,658
----------------------
TOTAL PREFERRED SECURITIES (Cost $7,643,229) 4,179,221
----------------------
Mutual Funds - 42.73%
Open End Mutual Funds - 38.33%
Rydex Series - Juno Fund 308,895 6,486,792
J.P. Morgan Fleming Emerging Markets Debt Fund 393,706 3,515,793
Fidelity Advisor Floating-Rate High Income Fund 440,766 4,367,990
Eaton Vance Floating-Rate High Income Fund 233,402 2,257,002
TransForce Income Fund 62,500 503,125
Specialty Foods Group Income Fund 114,000 560,880
KCP Income Fund 74,000 488,400
Connors Bros. Income Fund 41,600 512,096
Arctic Glacier Income Fund 55,500 486,180
ACS Media Income Fund 66,600 499,500
----------------------
19,677,758
----------------------
Closed End Mutual Funds - 4.40%
ING Senior Income Fund 145,978 2,258,272
----------------------
TOTAL MUTUAL FUNDS (Cost $22,041,412) 21,936,030
----------------------
Principal
Amount
------------------
Corporate Bonds - 21.45%
Bally Total Fitness Holdings, Series D, 9.875%, 10/15/2007 $ 1,300,000 1,085,500
Goodyear Tire & Rubber Notes, 8.500%, 3/15/2007 580,000 593,050
Land O Lakes, Inc., 8.750%, 11/15/2011 1,500,000 1,387,500
Charter Communications Holdings, LLC, 10.750%, 10/1/2009 1,000,000 845,000
Dobson Communications Corp., 8.875%, 10/1/2013 600,000 459,000
Trico Marine Services, Inc., 8.875%, 5/15/2012 (d) 800,000 428,000
Winn-Dixie Stores, Inc., 8.875%, 4/1/2008 2,600,000 2,470,000
Sonat, Inc., 7.625%, 7/15/2011 600,000 538,500
Tenet Healthcare Corp., 6.375%, 12/1/2011 600,000 528,000
Level 3 Communications, Inc., 11.250%, 3/15/2010 2,000,000 1,595,000
JL French Automotive Castings, Inc., Series B, 11.500%, 6/1/2009 670,000 458,950
Lucent Technologies, 6.450%, 3/15/2029 800,000 622,000
----------------------
TOTAL CORPORATE BONDS (Cost $11,076,582) 11,010,500
----------------------
</table>
See accompanying notes which are an integral part of the financial statements.
12
<page>
IMS Funds
IMS Strategic Income Fund
Schedule of Investments - Continued
June 30, 2004
<table>
<s> <c> <c>
Shares Value
------------------ ----------------------
Certificates of Deposit - 0.00%
Summit Securities CD, 8.50%, 11/29/2007 (e) 250,000 $ -
Summit Securities CD, 8.50%, 12/26/2007 (e) 300,000 -
----------------------
TOTAL CERTIFICATES OF DEPOSIT (Cost $550,000) -
----------------------
Shares
------------------
Money Market Securities - 0.84%
First American Prime Obligations Fund, 0.87% (f) 430,097 430,097
----------------------
TOTAL MONEY MARKET SECURITIES (Cost $430,097) 430,097
----------------------
TOTAL INVESTMENTS (Cost $55,552,306) - 99.55% $ 51,101,849
----------------------
Cash and other assets in excess of liabilities - 0.45% 232,545
----------------------
TOTAL NET ASSETS - 100.00% $ 51,334,394
======================
</table>
(a) Portion of security is pledged as collateral for call options written.
(b) Security valued at zero due to bankruptcy.
(c) Subsidiary companies have filed bankruptcy.
(d) Issue in default.
(e) Company has filed bankruptcy. All interest and principal payments have been
halted.
(f) Variable rate security; the coupon rate shown represents the rate at
June 30, 2004.
See accompanying notes which are an integral part of the financial statements.
13
<page>
IMS Funds
IMS Strategic Income Fund
Schedule of Investments - Continued
June 30, 2004
<table>
<s> <c> <c>
Options Written as of June 30, 2004
Shares
Subject
Common Stocks / Expiration Date @ Exercise Price to Call Value
- --------------------------------------------------------------------------------- ------------------ ----------------------
Alliance Capital Management Holding LP / July 2004 @ 35 31,400 $ 4,710
Bristol-Myers Squibb Co. / September 2004 @ 27.50 33,400 5,010
Chesapeake Corp. / August 2004 @ 25 21,400 32,100
ConAgra Foods, Inc. / September 2004 @ 30 26,800 2,680
Enterprise Products Partners LP / September 2004 @ 22.50 5,000 750
Genuine Parts Company / August 2004 @ 40 13,600 10,880
H.J. Heinz Company / September 2004 @ 40 23,500 14,100
JPMorgan Chase & Co. / August 2004 @ 40 21,600 10,800
Olin Corp. / August 2004 @ 17.50 28,200 16,920
R.R. Donnelly & Sons Company / September 2004 @ 35 16,600 8,300
SBC Communications, Inc. / October 2004 @ 27.50 37,100 3,710
Sturm, Ruger & Company, Inc. / July 2004 @ 12.50 43,000 8,600
The ServiceMaster Company / July 2004 @ 12.50 40,700 4,070
Tupperware Corp. / October 2004 @ 20 26,200 18,340
UST, Inc. / October 2004 @ 40 13,100 3,275
----------------------
TOTAL CALL OPTIONS WRITTEN (Premiums received $135,736) $ 144,245
----------------------
</table>
See accompanying notes which are an integral part of the financial statements.
14
<page>
IMS Funds
Statements of Assets and Liabilities
June 30, 2004
<table>
<s> <c> <c> <c>
IMS Capital IMS Strategic IMS Strategic
Value Fund Allocation Fund Income Fund
---------------- ------------------- ------------------
Assets
Investments in securities:
At cost $ 76,087,023 $ 19,139,332 $ 55,552,306
================ =================== ==================
At value $ 88,587,596 $ 19,963,848 $ 51,101,849
Cash - - 5,512
Interest receivable 1,200 2,145 270,023
Dividends receivable 69,085 27,763 118,546
Receivable for fund shares sold 439,348 246,472 128,591
Receivable for investments sold - - 18,249
Prepaid expenses 14,059 2,570 8,153
---------------- ------------------- ------------------
Total assets 89,111,288 20,242,798 51,650,923
---------------- ------------------- ------------------
Liabilities
Call options written (premiums received $135,736) - - 144,245
Payable to advisor 110,860 9,934 64,094
Payable for fund shares redeemed 489,557 - 86,281
Payable to trustees - 13 34
Accrued expenses 35,459 20,395 21,875
---------------- ------------------- ------------------
Total liabilities 635,876 30,342 316,529
---------------- ------------------- ------------------
Net Assets: $ 88,475,412 $ 20,212,456 $ 51,334,394
================ =================== ==================
Net Assets consist of:
Paid in capital $ 71,930,195 $ 18,876,175 $ 53,674,188
Accumulated undistributed net realized gain on investments 4,044,644 511,765 2,119,172
Net unrealized appreciation/(depreciation) on investments 12,500,573 824,516 (4,458,966)
---------------- ------------------- ------------------
$ 88,475,412 $ 20,212,456 $ 51,334,394
================ =================== ==================
Shares outstanding 4,928,012 1,642,743 4,890,444
---------------- ------------------- ------------------
(unlimited number of shares authorized)
Net asset value and offering
price per share $ 17.95 $ 12.30 $ 10.50
================ =================== ==================
Redemption price per share (a) $ 17.86 $ 12.24 $ 10.45
================ =================== ==================
</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.
15
<page>
IMS Funds
Statements of Operations
Year ended June 30, 2004
<table>
<s> <c> <c> <c>
IMS Capital IMS Strategic IMS Strategic
Value Fund Allocation Fund Income Fund (a)
------------------- ---------------------- ------------------
Investment Income
Dividend income $ 579,359 $ 74,653 $ 2,030,212
Interest income 12,779 6,671 894,201
------------------- ---------------------- ------------------
Total Income 592,138 81,324 2,924,413
------------------- ---------------------- ------------------
Expenses
Investment advisor fee 754,922 143,707 451,167
Administration expenses 56,333 30,000 31,955
Transfer agent expenses 34,014 20,094 19,135
Fund accounting expenses 25,748 16,573 17,108
Registration expenses 13,452 2,141 7,104
Legal expenses 12,859 9,016 7,475
Custodian expenses 18,444 5,601 10,426
Audit expenses 10,806 8,227 10,349
Insurance expenses 4,743 1,186 2,074
Pricing expenses 4,022 2,574 2,883
Miscellaneous expenses 16,724 4,274 10,882
Printing expenses 4,750 4,562 1,784
Trustees expenses 1,954 2,285 2,476
Advisor reimbursement recouped (b) - - 11,550
------------------ ---------------------- ------------------
Total Expenses 958,771 250,240 586,368
Waived advisory fees (b) (3,511) (17,684) -
Waived adminstrator fees - (8,424) -
------------------ ---------------------- ------------------
Net operating expenses 955,260 224,132 586,368
------------------ ---------------------- ------------------
Net Investment Income/(Loss) (363,122) (142,808) 2,338,045
------------------ ---------------------- ------------------
Realized & Unrealized Gain/(Loss)
Net realized gain on investment securities 6,421,483 717,462 2,236,637
Net realized gain/(loss) on option transactions (26,707) - 49,995
Capital gain income from investment companies - - 46,225
Net change in unrealized appreciation/(depreciation)
on investment securities 6,896,162 603,978 (4,917,961)
------------------ ---------------------- ------------------
Net realized and unrealized gain/(loss) on investment securities 13,290,938 1,321,440 (2,585,104)
------------------ ---------------------- ------------------
Net increase/(decrease) in net assets resulting from operations $ 12,927,816 $ 1,178,632 $ (247,059)
================== ====================== ==================
</table>
(a) For the period September 1, 2003 through June 30, 2004.
(b) See note 3 to the financial statements.
See accompanying notes which are an integral part of the financial statements.
16
<page>
IMS Funds
Statements of Changes In Net Assets
<table>
<s> <c> <c>
IMS Capital
Value Fund
----------------------------------------------
Year ended Year ended
Increase/(Decrease) in Net Assets due to: June 30, 2004 June 30, 2003
---------------------- -------------------
Operations
Net investment loss $ (363,122) $ (61,015)
Net realized gain on investment securities 6,421,483 320,703
Net realized (loss) on option transactions (26,707) (236,581)
Net change in unrealized appreciation/(depreciation) 6,896,162 4,174,278
---------------------- -------------------
Net increase in net assets resulting from operations 12,927,816 4,197,385
---------------------- -------------------
Distributions
From net investment income - (39,209)
From net realized gain (1,560,781) -
From return of capital - (31,729)
---------------------- -------------------
Total distributions (1,560,781) (70,938)
---------------------- -------------------
Capital Share Transactions
Proceeds from shares sold 60,376,393 14,575,612
Reinvestment of distributions 1,544,187 68,638
Amount paid for shares repurchased (16,217,001) (4,509,797)
---------------------- -------------------
Net increase in net assets resulting
from share transactions 45,703,579 10,134,453
---------------------- -------------------
Total Increase in Net Assets 57,070,614 14,260,900
---------------------- -------------------
Net Assets
Beginning of period 31,404,798 17,143,898
---------------------- -------------------
End of period $ 88,475,412 $ 31,404,798
====================== ===================
Accumulated undistributed net investment income
included in net assets at end of period $ - $ -
---------------------- -------------------
Capital Share Transactions
Shares sold 3,546,820 1,185,162
Shares issued in reinvestment of distributions 93,986 6,063
Shares repurchased (947,930) (393,648)
---------------------- -------------------
Net increase in capital shares 2,692,876 797,577
====================== ===================
</table>
See accompanying notes which are an integral part of the financial statements.
17
<page>
IMS Funds
Statements of Changes In Net Assets - continued
<table>
<s> <c> <c>
IMS Strategic
Allocation Fund
----------------------------------------------
Year ended Period ended
Increase/(Decrease) in Net Assets due to: June 30, 2004 June 30, 2003 (a)
---------------------- -------------------
Operations
Net investment loss $ (142,808) $ (13,066)
Net realized gain on investment securities 717,462 47,861
Net change in unrealized appreciation/(depreciation) 603,978 220,538
---------------------- -------------------
Net increase in net assets resulting from operations 1,178,632 255,333
---------------------- -------------------
Distributions
From net realized gain (97,684) -
---------------------- -------------------
Total distributions (97,684) -
---------------------- -------------------
Capital Share Transactions
Proceeds from shares sold 17,760,420 4,095,810
Reinvestment of distributions 96,390 -
Amount paid for shares repurchased (2,625,664) (450,781)
---------------------- -------------------
Net increase in net assets resulting
from share transactions 15,231,146 3,645,029
---------------------- -------------------
Total Increase in Net Assets 16,312,094 3,900,362
---------------------- -------------------
Net Assets
Beginning of period 3,900,362 -
---------------------- -------------------
End of period $ 20,212,456 $ 3,900,362
====================== ===================
Accumulated undistributed net investment income
included in net assets at end of period $ - $ -
---------------------- -------------------
Capital Share Transactions
Shares sold 1,482,858 416,154
Shares issued in reinvestment of distributions 8,215 -
Shares repurchased (217,846) (46,638)
---------------------- -------------------
Net increase in capital shares 1,273,227 369,516
====================== ===================
</table>
(a) For period of November 5, 2002 (commencement of operations) through June 30,
2003.
See accompanying notes which are an integral part of the financial statements.
18
<page>
IMS Funds
Statements of Changes In Net Assets - continued
<table>
<s> <c> <c>
IMS Strategic
Income Fund
----------------------------------------------
Period ended Period ended
Increase/(Decrease) in Net Assets due to: June 30, 2004 (a) August 31, 2003 (b)
---------------------- -------------------
Operations
Net investment income $ 2,338,045 $ 649,544
Net realized gain/(loss) on investment securities 2,282,862 (60,457)
Net realized gain on option transactions 49,995 -
Net change in unrealized appreciation/(depreciation) (4,917,961) 458,995
---------------------- -------------------
Net increase/(decrease) in net assets resulting from operations (247,059) 1,048,082
---------------------- -------------------
Distributions
From net investment income (2,434,737) (632,612)
From net realized gain (73,467) -
---------------------- -------------------
Total distributions (2,508,204) (632,612)
---------------------- -------------------
Capital Share Transactions
Proceeds from shares sold 38,730,331 28,991,779
Reinvestment of distributions 2,116,574 562,786
Amount paid for shares repurchased (14,337,696) (2,389,587)
---------------------- -------------------
Net increase in net assets resulting
from share transactions 26,509,209 27,164,978
---------------------- -------------------
Total Increase in Net Assets 23,753,946 27,580,448
---------------------- -------------------
Net Assets
Beginning of period 27,580,448 -
---------------------- -------------------
End of period $ 51,334,394 $ 27,580,448
====================== ===================
Accumulated undistributed net investment income
included in net assets at end of period $ - $ 16,932
---------------------- -------------------
Capital Share Transactions
Shares sold 3,548,597 2,651,244
Shares issued in reinvestment of distributions 195,836 51,196
Shares repurchased (1,338,992) (217,437)
---------------------- -------------------
Net increase in capital shares 2,405,441 2,485,003
====================== ===================
</table>
(a) For period of September 1, 2003 through June 30, 2004. The Fund elected to
change its fiscal year end to June 30.
(b) 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.
19
<page>
IMS Funds
Financial Highlights
For a share outstanding throughout the period
<table>
<s> <c> <c> <c> <c> <c>
IMS Capital Value Fund
Year ended Year ended Year ended Year ended Year ended
June 30, 2004 June 30, 2003 June 30, 2002 June 30, 2001 June 30, 2000
----------------- ---------------- ---------------- ---------------- -------------
Selected Per Share Data
Net asset value, beginning of period $ 14.05 $ 11.93 $ 13.87 $ 13.91 $ 14.56
----------------- ---------------- ---------------- ---------------- -------------
Income from investment operations
Net investment income/(loss) (0.10) (a) (0.04) 0.04 (0.05) (0.05)
Net realized and unrealized gain/(loss) 4.48 2.21 (0.19) 0.50 0.88
----------------- ---------------- ---------------- ---------------- -------------
Total from investment operations 4.38 2.17 (0.15) 0.45 0.83
----------------- ---------------- ---------------- ---------------- -------------
Less Distributions to shareholders:
From net investment income - (0.03) - - -
From net realized gain (0.48) - (1.79) (0.49) (1.48)
From return of capital - (0.02) - - -
----------------- ---------------- ---------------- ---------------- -------------
Total distributions (0.48) (0.05) (1.79) (0.49) (1.48)
----------------- ---------------- ---------------- ---------------- -------------
Paid in capital from redemption fees - (b) - - - -
----------------- ---------------- ---------------- ---------------- -------------
Net asset value, end of period $ 17.95 $ 14.05 $ 11.93 $ 13.87 $ 13.91
================= ================ ================ ================ =============
Total Return (c) 31.46% 18.28% -1.05% 3.72% 6.39%
Ratios and Supplemental Data
Net assets, end of period (000) $ 88,475 $ 31,405 $ 17,144 $ 11,488 $11,585
Ratio of expenses to average net assets 1.59% 1.59% 1.59% 1.59% 1.59%
Ratio of expenses to average net assets
before waiver & reimbursement 1.60% 2.05% 2.23% 2.28% 2.08%
Ratio of net investment income/(loss) to
average net assets (0.60)% (0.34)% 0.29% (0.39)% (0.36)%
Ratio of net investment income/(loss) to
average net assets before waiver
& reimbursement (0.61)% (0.79)% (0.35)% (1.09)% (0.84)%
Portfolio turnover rate 46.69% 44.72% 33.40% 77.87% 75.69%
</table>
(a) Net investment loss per share is based on average shares outstanding
during the year.
(b) Redemption fees resulted in less than $0.01 per share.
(c) Total return in the above table represents the rate that the investor
would have earned or lost on an investment in the Fund, assuming
reinvestment of dividends.
See accompanying notes which are an integral part of the financial statements.
20
<page>
IMS Funds
Financial Highlights
For a share outstanding throughout the period
<table>
<s> <c> <c>
IMS Strategic Allocation Fund
Year ended Period ended
June 30, 2004 June 30, 2003 (a)
----------------- -----------------
Selected Per Share Data
Net asset value, beginning of period $ 10.56 $ 10.00
----------------- -----------------
Income from investment operations
Net investment (loss) (0.15) (b) (0.05)
Net realized and unrealized gain/(loss) 2.00 0.61
----------------- -----------------
Total from investment operations 1.85 0.56
----------------- -----------------
Less Distributions to shareholders:
From net realized gain (0.11) -
----------------- -----------------
Total distributions (0.11) -
----------------- -----------------
Paid in capital from redemption fees - (c) -
----------------- -----------------
Net asset value, end of period $ 12.30 $ 10.56
================= =================
Total Return (d) 17.60% 5.60% (e)
Ratios and Supplemental Data
Net assets, end of period (000) $ 20,212 $ 3,900
Ratio of expenses to average net assets 1.96% 1.96% (f)
Ratio of expenses to average net assets
before waiver & reimbursement 2.19% 4.75% (f)
Ratio of net investment income/(loss) to
average net assets (1.25)% 0.85% (f)
Ratio of net investment income/(loss) to
average net assets before waiver & reimbursement (1.48)% (3.65)%(f)
Portfolio turnover rate 146.64% 226.36%
</table>
(a) For the period November 5, 2002 (Commencement of operations) through June
30, 2003.
(b) Net investment loss per share is based on average shares outstanding
during the year.
(c) Redemption fees resulted in less than $0.01 per share.
(d) Total return in the above table represents the rate that the investor
would have earned or lost on an investment in the Fund, assuming
reinvestment of dividends.
(e) Not annualized.
(f) Annualized.
See accompanying notes which are an integral part of the financial statements.
21
<page>
IMS Funds
Financial Highlights
For a share outstanding throughout the period
<table>
<s> <c> <c>
IMS Strategic Income Fund
Period ended Period ended
June 30, 2004 (a) August 31, 2003 (b)
------------------- -------------------
Selected Per Share Data
Net asset value, beginning of period $ 11.10 $ 10.00
------------------- -------------------
Income from investment operations
Net investment income 0.60 (c) 0.61
Net realized and unrealized gain/(loss) (0.56) 1.00
------------------- -------------------
Total from investment operations 0.04 1.61
------------------- -------------------
Less Distributions to shareholders:
From net investment income (0.62) (0.51)
From net realized gain (0.02) -
------------------- -------------------
Total distributions (0.64) (0.51)
------------------- -------------------
Paid in capital from redemption fees - (d) -
------------------- -------------------
Net asset value, end of period $ 10.50 $ 11.10
=================== ===================
Total Return (e) (f) 0.33% 16.31%
Ratios and Supplemental Data
Net assets, end of period (000) $ 51,334 $ 27,580
Ratio of expenses to average net assets (g) 1.63% 1.96%
Ratio of expenses to average net assets
before waiver & reimbursement (g) 1.63% 2.14%
Ratio of net investment income to
average net assets (g) 6.52% 6.77%
Ratio of net investment income to
average net assets before waiver & reimbursement (g) 6.52% 6.58%
Portfolio turnover rate 163.53% 18.01%
</table>
(a) For the period September 1, 2003 to June 30, 2004. The Fund elected to
change its year end to June 30.
(b) For the period November 5, 2002 (commencement of operations) to August 31,
2003.
(c) Net investment income per share is based on average shares outstanding
during the year.
(d) Redemption fees resulted in less than $0.01 per share.
(e) Not annualized.
(f) Total return in the above table represents the rate that the investor
would have earned or lost on an investment in the Fund, assuming
reinvestment of dividends.
(g) Annualized.
See accompanying notes which are an integral part of the financial statements.
22
<page>
IMS Funds
Notes to Financial Statements
June 30, 2004
NOTE 1. ORGANIZATION
IMS Capital Value Fund (the "Capital Value Fund") was organized as a
diversified series of AmeriPrime Funds (the "Trust") on July 25, 1996 and
commenced operations on August 5, 1996. The IMS Strategic Allocation Fund (the
"Allocation Fund") was organized as a non-diversified series of the Trust on
September 30, 2002 and commenced operations on November 5, 2002. The IMS
Strategic Income Fund (the "Income Fund") was organized as a non-diversified
series of the Trust on September 30, 2002 and commenced operations on November
5, 2002. The Trust is an open-end investment company established under the laws
of Ohio by an Agreement and Declaration of Trust dated August 8, 1995 (the
"Trust Agreement"). The Trust Agreement permits the Trustees to issue an
unlimited number of shares of beneficial interest of separate series. Each Fund
is one of a series of funds currently authorized by the Trustees. The investment
objective of the Capital Value Fund is to provide long-term growth from capital
appreciation, dividends and interest. The investment objective of the Allocation
Fund is to provide long-term growth from capital appreciation, dividends and
interest. The investment objective of the Income Fund is to provide current
income. The investment advisor of each Fund is IMS Capital Management, Inc. (the
"Advisor").
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
each Fund in the preparation of its financial statements.
Securities Valuations - Equity 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. Securities that are traded on any stock
exchange are generally valued by the pricing service at the last quoted sale
price. Lacking a last sale price, an exchange traded security is generally
valued by the pricing service at its last bid price. Securities traded in the
NASDAQ over-the-counter market are generally valued by the pricing service at
the NASDAQ Official Closing Price. When market quotations are not readily
available, when the Advisor determines that the market quotation or the price
provided by the pricing service does not accurately reflect the current market
value or when restricted or illiquid 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 of the
Trust (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 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, 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.
Option writing - When each Fund writes an option, an amount equal to the
premium received by each Fund is recorded as a liability and is subsequently
adjusted to the current fair value of the option written. Premiums received from
writing options that expire unexercised are treated by each Fund on the
expiration date as realized gains from investments. The difference between the
premium and the amount paid on effecting a closing purchase transaction,
including brokerage commissions, is also treated as a realized gain, or if the
premium is less than the amount paid for the closing purchase transaction, as a
realized loss.
23
<page>
IMS Funds
Notes to Financial Statements
June 30, 2004 - continued
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued
If a call option is exercised, the premium is added to the proceeds from the
sale of the underlying security in determining whether each Fund has realized a
gain or loss. Each Fund as writer of an option bears the market risk of an
unfavorable change in the price of the security underlying the written option.
Federal Income Taxes- The Funds' policy is to continue to comply with the
requirements of subchapter M of the Internal Revenue Code that are applicable to
regulated investment companies and to distribute all its taxable income to its
shareholders. Therefore, no federal income tax provision is required.
Security Transactions and Related Income- Each Fund follows industry
practice and records security transactions on the trade date. The specific
identification method is used for determining gains or losses for financial
statements and income tax purposes. Dividend income is recorded on the
ex-dividend date and interest income is recorded on an accrual basis. Discounts
and premiums on securities purchased are amortized over the life of the
respective securities.
Dividends and Distributions- The Income Fund intends to distribute
substantially all of its net investment income as dividends to its shareholders
on a monthly basis. The Capital Value Fund and Allocation Fund intend to
distribute substantially all of their net investment income as dividends to
their shareholders on at least an annual basis. Each Fund intends to distribute
its net realized long term capital gains and its net realized short term capital
gains at least once a year. Dividends to shareholders, which are determined in
accordance with income tax regulations, are recorded on the ex-dividend date.
The treatment for financial reporting purposes of distributions made to
shareholders during the year from net investment income or net realized capital
gains may differ from their ultimate treatment for federal income tax purposes.
These differences are caused primarily by differences in the timing of the
recognition of certain components of income, expense or realized capital gain
for federal income tax purposes. Where such differences are permanent in nature,
they are reclassified in the components of the net assets based on their
ultimate characterization for federal income tax purposes. Any such
reclassifications will have no effect on net assets, results of operations or
net asset values per share of the Fund. For the fiscal year and period ended
June 30, 2004, net investment loss of $363,122, $142,808 and $79,760 for the
Capital Value, Allocation and Income Funds, respectively, was reclassed to
accumulated undistributed net realized short-term gains.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Each Fund retains IMS Capital Management, Inc. to manage its investments.
Under the terms of the respective management agreements (the "Agreements"), the
Advisor manages each Fund's investments subject to approval of the Board. As
compensation for its management services, the Funds are 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 each Fund. For the fiscal year and
period ended June 30, 2004, the Advisor earned fees, before reimbursement, of
$754,922, $143,707 and $451,167 from the Capital Value Fund, Allocation Fund and
Income Fund, respectively.
The Advisor has contractually agreed to waive all or a portion of its fees
and/or reimburse expenses of each Fund, but only to the extent necessary to
maintain total operating expenses (excluding brokerage costs, borrowing costs,
taxes and extraordinary expenses) at 1.59% of average daily net assets with
respect to the Capital Value Fund, and 1.96% of average daily net assets with
respect to the Allocation Fund and Income Fund, through October 31, 2006. For
the fiscal year ended June 30, 2004, the Advisor reimbursed expenses of $3,511
for the Capital Value Fund and $17,684 for the Allocation Fund. With respect to
the Allocation Fund and Income Fund, any waiver or reimbursement of
organizational or operating expenses by the Advisor is subject to repayment by
the applicable Fund in the first, second and third fiscal years
24
<page>
IMS Funds
Notes to Financial Statements
June 30, 2004 - continued
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued
following the year in which any such reimbursement or waiver occurs, if the Fund
is able to make the payment without exceeding the above described expense
limitations. For the period ended June 30, 2004, the Income Fund repaid $11,550
to the Advisor. The remaining amounts subject to repayment by the Allocation and
Income Funds, pursuant to the aforementioned conditions, at June 30, 2004, were
as follows:
To be repaid
Fund Amount by June 30,
------------------- ------------ --------------
Allocation Fund $ 42,945 2006
17,684 2007
Income Fund 6,302 2006
At June 30, 2004, the Advisor was owed $110,860, $9,934, and $64,094 from
the Capital Value Fund, Allocation Fund and Income Fund, respectively, for its
advisory services.
Each 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 each Fund equal to an annual rate
of 0.10% of the Fund's average daily net assets under $50 million, 0.07% of the
Fund's average daily net assets from $50 million to $100 million, 0.05% of the
Fund's average daily net assets from $100 million to $150 million, and 0.03% of
the Fund's average daily net assets over $150 million, (subject to a minimum fee
of $2,500 per month). For the fiscal year and period ended June 30, 2004,
Unified earned $56,333, $30,000, and $31,955 from the Capital Value Fund,
Allocation Fund, and Income Fund, respectively. For the fiscal year ended June
30, 2004, Unified waived administrative fees of $8,424 for the Allocation Fund.
Each Fund also retains Unified to act as each Fund's transfer agent and
fund accountant. For its services as transfer agent, Unified receives a monthly
fee from each Fund of $1.25 per shareholder (subject to a minimum monthly fee of
$1,250), plus out-of-pocket expenses, for these transfer agency services. For
the fiscal year and period ended June 30, 2004, Unified received fees of
$19,008, $13,465, and $13,058 from the Capital Value Fund, Allocation Fund, and
Income Fund, respectively for transfer agent services provided to the Funds and
$15,006, $6,629, and $6,077 from the Capital Value Fund, Allocation Fund, and
Income Fund, respectively, in reimbursement for out-of-pocket expenses incurred
in providing transfer agent services to the Funds. For its services as fund
accountant, Unified receives an annual fee from each Fund equal to 0.05% of the
Fund's assets up to $50 million, 0.04% of the Fund's assets from $50 million to
$100 million, 0.03% of the Fund's assets from $100 million to $150 million, and
0.02% of the Fund's net assets over $150 million (subject to various monthly
minimum fees, the maximum being $1,666). For the fiscal year and period ended
June 30, 2004, Unified earned $25,748, $16,573, and $17,108 from the Capital
Value Fund, Allocation Fund, and Income Fund, respectively. Certain Trustees and
the officers of the Trust are employees of Unified and/or shareholders of
Unified Financial Services, Inc. (the parent of Unified).
Each 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 Funds for the fiscal year and period ended June 30, 2004.
Certain Trustees and the officers of the Trust have an ownership interest in
Unified Financial Services, Inc. (the parent company of the Distributor), and an
officer of the Trust is an officer of the Distributor. As a result, those
persons may be deemed to be affiliates of the Distributor.
25
<page>
IMS Funds
Notes to Financial Statements
June 30, 2004 - continued
NOTE 4. INVESTMENTS
For the fiscal year and period ended June 30, 2004, purchases and sales of
investment securities, other than short-term investments and short-term U.S.
government obligations were as follows:
<table>
<s> <c> <c> <c>
Capital Value Allocation Income
Fund Fund Fund
---------------- ----------------- ---------------
Purchases
U.S. Government Obligations $ - $ - $ -
Other 72,537,526 27,618,425 94,845,887
Sales
U.S. Government Obligations $ - $ - $ -
Other 26,600,787 14,637,733 67,066,982
</table>
As of June 30, 2004, the net unrealized appreciation / (depreciation) of
investments for tax purposes was as follows:
<table>
<s> <c> <c> <c>
Capital Value Allocation Income
Fund Fund Fund
---------------- ------------- ----------------
Gross Appreciation $ 14,056,461 $ 845,479 $ 724,403
Gross (Depreciation) (1,636,704) (64,333) (5,227,127)
---------------- ------------- ----------------
Net Appreciation/(Depreciation)
on Investments $ 12,419,757 $ 781,146 $ (4,502,724)
================ ============= ================
</table>
At June 30, 2004, the aggregate cost of securities for federal income tax
purposes was $76,167,839, $19,182,702, and $55,596,064 for the Capital Value
Fund, Allocation Fund, and Income Fund, respectively. The difference between
book cost and tax cost represents the tax deferral of losses on wash sales.
NOTE 5. ESTIMATES
Preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America 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. BENEFICIAL OWNERSHIP
The beneficial ownership, either directly or indirectly, of more than 25%
of the voting securities of a fund creates a presumption of control of the fund,
under Section 2(a)(9) of the Investment Company Act of 1940. As of June 30,
2004, National Financial Securities Corp. ("National Financial") held 39.02% of
the Capital Value Fund, 79.09% of the Allocation Fund, and 53.39% of the Income
Fund, in an omnibus account for the benefit of others. As a result, National
Financial may be deemed to control each Fund.
26
<page>
IMS Funds
Notes to Financial Statements
June 30, 2004 - continued
NOTE 7. WRITTEN CALL OPTIONS
Capital Value Fund. As of June 30, 2004, the Capital Value Fund had no
liabilities for written options.
Transactions in written call options during the fiscal year ended June 30,
2004 for the Capital Value Fund were as follows:
Number
of Premiums
Contracts Received
------------- -------------
Options outstanding at June 30, 2003 758 $ 104,521
Written options - -
Options terminated in closing purchase transactions - -
Options expired - -
Options exercised (758) (104,521)
------------- -------------
Options outstanding at June 30, 2004 - $ -
============= =============
Income Fund. As of June 30, 2004, portfolio securities valued at $9,533,067 were
held in escrow by the custodian as cover for written call options by the Income
Fund.
Transactions in written call options during the period ended June 30, 2004
for the Income Fund were as follows:
Number
of Premiums
Contracts Received
------------ -------------
Options outstanding at August 31, 2003 - $ -
Written options 5,040 185,731
Options terminated in closing purchase transactions - -
Options expired (223) (11,784)
Options exercised (1,001) (38,211)
------------- ------------
Options outstanding at June 30, 2004 3,816 $ 135,736
============= ============
NOTE 8. DISTRIBUTIONS TO SHAREHOLDERS
Capital Value Fund. On December 18, 2003, the Capital Value Fund paid capital
gains distributions of $0.4759 per share to shareholders of record on December
17, 2003.
The tax characterization of distributions for the fiscal years ended June 30,
2004 and 2003 was as follows:
Distributions paid from: 2004 2003
---------------- ---------------
Ordinary income $ - $ 39,209
Short-term Capital Gain 680,525 -
Long-term Capital Gain 880,256 -
Return of Capital - 31,729
--------------- ---------------
$ 1,560,781 $ 70,938
================ ===============
27
<page>
IMS Funds
Notes to Financial Statements
June 30, 2004 - continued
NOTE 8. DISTRIBUTIONS TO SHAREHOLDERS - continued
Allocation Fund. On December 18, 2003, the Allocation Fund paid a short-term
capital gain distribution of $0.1134 per share to shareholders of record on
December 17, 2003.
The tax characterization of distributions for the fiscal year ended June 30,
2004 and period ended June 30, 2003 was as follows:
Distributions paid from: 2004 2003
--------------- -------------
Ordinary income $ - $ -
Short-term Capital Gain 97,684 -
Long-term Capital Gain - -
- --------------- -------------
$ 97,684 $ -
=============== =============
Income Fund. For the period ended June 30, 2004, the Income Fund paid monthly
income distributions totaling $0.6199 per share. On December 18, 2003, the
Income Fund paid a short-term capital gain distribution of $0.0196 per share to
shareholders of record on December 17, 2003.
The tax characterization of distributions for periods ended June 30, 2004 and
2003 was as follows:
Distributions paid from: 2004 2003
--------------- -------------
Ordinary income $ 2,434,737 $ 632,612
Short-term Capital Gain 73,467 -
Long-term Capital Gain - -
--------------- -------------
$ 2,508,204 $ 632,612
=============== =============
As of June 30, 2004, the components of distributable earnings/(accumulated
losses) on a tax basis were as follows:
Capital Value Allocation Income
Fund Fund Fund
------------- ------------- -------
Undistributed ordinary income $ 656,675 $ 398,506 $ 601,454
Undistributed long-term capital gain 3,468,785 156,629 1,561,476
Unrealized appreciation/(depreciation) 12,419,757 781,146 (4,502,724)
------------- ------------- ---------
$16,545,217 $ 1,336,281 $ (2,339,794)
============ ============= ==========
The difference between book basis and tax basis unrealized
appreciation/(depreciation) is attributable to the tax deferral of losses on
wash sales.
NOTE 9. CHANGE IN ACCOUNTANTS
On March 3, 2004, McCurdy & Associates CPA's, Inc. ("McCurdy") notified the
Funds of its intention to resign as the Funds' independent auditors upon
selection of replacement auditors.
On March 14, 2004, the Board and the Funds' Audit Committee selected Cohen
McCurdy, Ltd. ("Cohen") to replace McCurdy as the Funds' auditors for the fiscal
year ending June 30, 2004 to be effective upon the resignation of McCurdy.
28
<page>
IMS Funds
Notes to Financial Statements
June 30, 2004 - continued
NOTE 9. CHANGE IN ACCOUNTANTS - continued
On March 14, 2004, upon receipt of notice that Cohen was selected as the
Funds' auditor, McCurdy, whose audit practice was acquired by Cohen, resigned as
independent auditors to the Funds. McCurdy's reports on the Capital Value Fund's
financial statements for the fiscal year ended June 30, 2003, the Allocation
Fund's financial statements for the period ended June 30, 2003, and the Income
Fund's financial statements for the period ended August 31, 2003, contained no
adverse opinion or a disclaimer of opinion nor were they qualified or modified
as to uncertainty, audit scope or accounting principles. During the fiscal
periods stated above and through the term of the engagement with McCurdy, there
were no disagreements with McCurdy on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which,
if not resolved to the satisfaction of McCurdy, would have caused the Advisor to
make reference to the subject matter of the disagreements in connection with its
reports on the Funds' financial statements for such periods.
Neither the Funds nor anyone on its behalf consulted with Cohen on items
which (i) concerned the application of accounting principles to a specified
transaction, either completed or proposed or the type of audit opinion that
might be rendered on the Funds' financial statements as a result of such
consultations or (ii) concerned the subject of a disagreement (as defined in
paragraph (a)(1)(iv) of Item 304 of Regulation S-K) or a reportable event (as
described in paragraph (a)(1)(v) of said Item 304).
29
<page>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Shareholders and
Board of Trustees
IMS Capital Value Fund
IMS Strategic Allocation Fund
IMS Strategic Income Fund
(series' of AmeriPrime Funds)
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of the IMS Funds comprising the IMS Capital Value,
IMS Strategic Allocation, and IMS Strategic Income Portfolios as of June 30,
2004, and the related statements of operations, the statements of changes in net
assets and the financial highlights for the year and 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 audit. The statements
of changes in net assets for the year and period ended June 30, 2003 for the
Capital Value and Strategic Allocation Funds and for the period ended August 31,
2003 for the Strategic Income Fund and the financial highlights for the periods
indicated prior to June 30, 2004 were audited by McCurdy & Associates CPA's,
Inc., whose audit practice was acquired by Cohen McCurdy, Ltd. McCurdy &
Associates CPA's, Inc. expressed unqualified opinions on those statements.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 June 30, 2004 by correspondence with the Funds'
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 each
of the portfolios constituting the IMS Funds as of June 30, 2004, the results of
their operations, changes in their net assets and the financial highlights for
the year then ended, in conformity with accounting principles generally accepted
in the United States of America.
/s/ Cohen McCurdy
Westlake, Ohio 44145
August 25, 2004
<page>
Trustees and Officers (Unaudited)
Independent Trustees
<table>
<s> <c>
- ----------------------------------------------------- ----------------------------------------------------------------
Name, Address*, (Date of Birth), Position with Fund Principal Occupation During Past 5 Years and Other
Complex,** Term of Position with Trust Directorships
- ----------------------------------------------------- ----------------------------------------------------------------
- ----------------------------------------------------- ----------------------------------------------------------------
Gary E. Hippenstiel (1947) Director, Vice President and Chief Investment Officer of
Legacy Trust Company, N.A. since 1992. Trustee of AmeriPrime
Trustee, 1995 to present Advisors Trust since July 2002 and Unified Series Trust since
December 2002. Trustee of CCMI Funds since June 2003. Trustee
of Access Variable Insurance Trust, since April 2003.
- ----------------------------------------------------- ----------------------------------------------------------------
- ----------------------------------------------------- ----------------------------------------------------------------
Stephen A. Little (1946) President and founder, The Rose, Inc., a registered investment
advisor, since April 1993. Trustee of AmeriPrime Advisors
Trustee, December 2002 to present Trust since November 2002 and Unified Series Trust since
December 2002. Trustee of CCMI Funds since June 2003.
- ----------------------------------------------------- ----------------------------------------------------------------
- ----------------------------------------------------- ----------------------------------------------------------------
Daniel J. Condon (1950) President, 2004 to present, Vice President and General Manager,
1990 to 2003, International Crankshaft Inc., an automotive
Trustee, December 2002 to present equipment manufacturing company, 1990 to present; Trustee, The
Unified Funds, from 1994 to 2002; Trustee, Firstar Select Funds,
a REIT mutual fund, from 1997 to 2000. Trustee of AmeriPrime
Advisors Trust since November 2002 and Unified Series Trust since
December 2002. Trustee of CCMI Funds since June 2003.
- ----------------------------------------------------- ----------------------------------------------------------------
Interested Trustees and Principal Officers
- --------------------------------------------------- ------------------------------------------------------------------
Name, Address*, (Date of Birth), Position with Principal Occupation During Past 5 Years
Fund Complex,** Term of Position with Trust and Other Directorships
- --------------------------------------------------- ------------------------------------------------------------------
- --------------------------------------------------- ------------------------------------------------------------------
Timothy L. Ashburn (1950)*** Employed by Unified Financial Services, Inc., Chairman of
Unified Financial Services, Inc. 1989 to 2004, Chief Executive
Trustee and Chairman, December 2002 to present Officer from 1989 to 1992 and 1994 to April 2002, and President
President, December 2002 to July 2004 from November 1997 to April 2000. Trustee of AmeriPrime Advisors
Asst. Secretary, December 2003 to present Trust since November 2002 and Unified Series Trust since October
Secretary, June 2003 to December 2003 2002. Trustee of CCMI Funds since June 2003.
- --------------------------------------------------- ------------------------------------------------------------------
- --------------------------------------------------- ------------------------------------------------------------------
Ronald C. Tritschler (1952)**** Chief Executive Officer, Director and legal counsel of The Webb
Companies, a national real estate company, from 2001 to present;
Trustee, December 2002 to present Executive Vice President and Director of The Webb Companies from
1990 to 2000; Director, First State Financial, 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. Trustee of AmeriPrime Advisors Trust since
November 2002 and Unified Series Trust since December 2002.
Trustee of CCMI Funds since June 2003.
- --------------------------------------------------- ------------------------------------------------------------------
- --------------------------------------------------- ------------------------------------------------------------------
Anthony J. Ghoston (1959) Executive Vice President of Unified Fund Services, Inc. since
June 2004; Senior Vice President of Unified Fund Services, Inc.
President, July 2004 to present April 2003 to June 2004; Senior Vice President and Chief
Information Officer of Unified Financial Services since 1997.
- --------------------------------------------------- ------------------------------------------------------------------
- --------------------------------------------------- ------------------------------------------------------------------
Thomas G. Napurano (1941) Chief Financial Officer and Executive Vice President of Unified
Financial Services, Inc., the parent company of the Trust's
Chief Financial Officer and Treasurer, October administrator and Distributor; Director, Unified Financial
2002 to present Services, Inc., from 1989 to March 2002. CFO of AmeriPrime
Advisors Trust since October 2002 and Unified Series Trust since
December 2002. CFO of CCMI Funds since June 2003.
- --------------------------------------------------- ------------------------------------------------------------------
- --------------------------------------------------- ------------------------------------------------------------------
Carol Highsmith (1964) Vice President, Unified Fund Services, Inc., 2003 to present;
Employed by Unified Fund Services, Inc. (November 1994 to
Secretary, December 2003 to present present). Secretary of AmeriPrime Advisors Trust, Unified Series
Asst. Secretary, October 2002 to December 2003 Trust, and CCMI Funds since December 2003.
- --------------------------------------------------- ------------------------------------------------------------------
</table>
* The address for each of the trustees and officers is 431 N. Pennslyvania,
Indianapolis, IN 46204.
** Fund Complex refers to AmeriPrime Advisors Trust, AmeriPrime Funds and
Unified Series Trust. The Fund Complex consists of 29 series.
*** 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 has an ownership interest in Unified Financial Services, Inc.,
the parent of the Distributor of certain series in the Fund Complex.
**** 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 Distributor of certain series in the Fund Complex.
31
<page>
The Funds' Statement of Additional Information ("SAI") includes additional
information about the trustees and is available, without charge, upon request.
You may call toll-free (800) 934-5550 to request a copy of the SAI or to make
shareholder inquiries.
PROXY VOTING
A description of the policies and procedures that each Fund uses to determine
how to vote proxies relating to portfolio securities and information regarding
how the Funds voted those proxies during the twelve month period ended June 30,
2004, are available without charge, upon request by (1) calling the Funds at
(800) 934-5550 and (2) from Fund documents filed with the Securities and
Exchange Commission ("SEC") on the SEC's website at www.sec.gov.
TRUSTEES
Timothy L. Ashburn, Chairman
Gary E. Hippenstiel
Stephen A. Little
Daniel J. Condon
Ronald C. Tritschler
OFFICERS
Anthony J. Ghoston, President
Thomas G. Napurano, Chief Financial Officer and Treasurer
Carol J. Highsmith, Secretary
INVESTMENT ADVISOR
IMS Capital Management, Inc.
8995 S.E. Otty Road
Portland, Oregon 97266
DISTRIBUTOR
Unified Financial Securities, Inc.
431 N. Pennsylvania Street
Indianapolis, Indiana 46204
INDEPENDENT ACCOUNTANTS
Cohen McCurdy, Ltd.
826 Westpoint Pkwy., Suite 1250
Westlake, Ohio 44145
LEGAL COUNSEL
Thompson Hine, LLP
312 Walnut St., Suite 1400
Cincinnati, Ohio 45202
CUSTODIAN
U.S. Bank, N.A.
425 Walnut St.
Cincinnati, Ohio 45202
ADMINISTRATOR, TRANSFER AGENT
AND FUND ACCOUNTANT
Unified Fund Services, Inc.
431 N. Pennsylvania Street
Indianapolis, Indiana 46204
This report is intended only for the information of shareholders or those who
have received the Funds' prospectus which contains information about each Fund's
management fee and expenses. Please read the prospectus carefully before
investing.
Distributed by Unified Financial Securities, Inc.
Member NASD/SIPC
32
<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.
(a) Audit Fees
FY 2003 $ 23,180
FY 2004 $ 22,400
(b) Audit-Related Fees
Registrant
FY 2003 $ 0
FY 2004 $ 0
Nature of the fees:
(c) Tax Fees
Registrant
FY 2003 $ 3,202
FY 2004 $ 2,025
Nature of the fees: prepare tax returns
(d) All Other Fees
Registrant
FY 2003 $ 1,995
FY 2004 $ 1,240
Nature of the fees: out of pockets, consents
(e) (1) Audit Committee's Pre-Approval Policies
The Audit Committee Charter requires the Audit Committee to be
responsible for the selection, retention or termination of auditors and, in
connection therewith, to (i) evaluate the proposed fees and other
compensation, if any, to be paid to the auditors, (ii) evaluate the
independence of the auditors, (iii) pre-approve all audit services and,
when appropriate, any non-audit services provided by the independent
auditors to the Trust, (iv) pre-approve, when appropriate, any non-audit
services provided by the independent auditors to the Trust's investment
adviser, or any entity controlling, controlled by, or under common control
with the investment adviser and that provides ongoing services to the Trust
if the engagement relates directly to the operations and financial
reporting of the Trust, and (v) receive the auditors' specific
representations as to their independence;
(2) Percentages of Services Approved by the Audit Committee
Registrant
Audit-Related Fees: 100 %
Tax Fees: 100 %
All Other Fees: 100 %
(f) During audit of registrant's financial statements for the most recent fiscal
year, less than 50 percent of the hours expended on the principal accountant's
engagement were attributed to work performed by persons other than the principal
accountant's full-time, permanent employees.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's investment
adviser (not including any sub-adviser whose role is primarily portfolio
management and is subcontracted with or overseen by another investment adviser),
and any entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant:
Registrant
FY 2003 $ 1,995
FY 2004 $ 1,240
(h) Not applicable. The auditor performed no services for the registrant's
investment adviser or any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant.
Item 5. Audit Committee of Listed Companies. Not applicable.
Item 6. Schedule of Investments. Not applicable - schedule filed with Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Funds. Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
The registrant has not adopted procedures by which shareholders may recommend
nominees to the registrant's board of trustees.
Item 10. Controls and Procedures.
(a) Based on an evaluation of the registrant's disclosure controls and
procedures as of June 24, 2004, 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 second fiscal
half-year that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
Item 11. Exhibits.
(a)(1) Code is filed herewith
(a)(2) Certifications by the registrant's principal executive officer and
principal financial officer, pursuant to Section 302 of the Sarbanes- Oxley Act
of 2002 and required by Rule 30a-2under the Investment Company Act of 1940 are
filed herewith.
(a)(3) Not Applicable
(b) Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 is filed herewith.
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/ Anthony Ghoston
Anthony Ghoston, President
Date September 8, 2004
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/ Anthony Ghoston
Anthony Ghoston, President
Date September 8, 2004
By
* /s/ Thomas Napurano
Thomas Napurano, Chief Financial Officer and Treasurer
Date September 8, 2004