As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved of these securities, nor has the Commission determined that this Prospectus is complete or accurate. Any representation to the contrary is a criminal offense.
Net Asset Value = Total Assets(Class) - Liabilities(Class) / Number of Shares Outstanding (Class)
The NAV is generally calculated as of the close of trading on the New York Stock Exchange (normally 4:00 p.m. Eastern time) every day the Exchange is open. The New York Stock Exchange is generally open every day other than
weekends and holidays. All purchases, redemptions or reinvestments of Fund shares will be priced at the next NAV calculated after your order is received in proper form by the Fund’s Transfer Agent, Mutual Shareholder Services. To be in proper
form, the purchase order must be complete and contain all the information necessary for the Transfer Agent to process your order. If you purchase shares directly from the Fund, your order must be placed with the Transfer Agent prior to the close of
the trading of the New York Stock Exchange in order to be confirmed for that day’s NAV. The Fund’s assets generally are valued at their market value. Certain short-term securities are valued at amortized cost, which approximates market
value. If market prices are not available or, in the Adviser's opinion, market prices do not reflect fair value, or if an event occurs after the close of trading (but prior to the time the NAV is calculated) that materially affects fair value, the
Adviser may value the Fund's assets at their fair value according to policies approved by the Fund's Board of Trustees. For example, if trading in a portfolio security is halted and does not resume before the Fund calculates its NAV, the Adviser may
need to price the security using the Fund's fair value pricing guidelines. Without a fair value price, short term traders could take advantage of the arbitrage opportunity and dilute the NAV of long term investors. Fair valuation of a Fund's
portfolio securities can serve to reduce arbitrage opportunities available to short term traders, but there is no assurance that fair value pricing policies will prevent dilution of the Fund's NAV by short term traders. The Fund may use pricing
services to determine market value.
Customer Identification Program
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an
account. This means that, when you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask for identifying documents, and may take additional steps to verify your
identity. We may not be able to open an account or complete a transaction for you until we are able to verify your identity.
How to Purchase Shares
Share Classes: This Prospectus describes classes of shares offered by the Fund: No-Load Shares and Class A Shares. The main differences between the classes are sales charges and ongoing fees. Each class of shares in the Fund
represents interest in the same portfolio of investments within the Fund. The Fund reserves the right to waive sales charges.
Prospectus 9
Payments to Broker-Dealers and Other Financial Intermediaries
You may make initial and subsequent purchases of shares of the Fund through a financial intermediary, such as an investment adviser or broker-dealer, bank or other financial institution that purchases shares for its customers.
Before investing in the Fund through a financial intermediary, you should read carefully any materials provided by the intermediary together with this prospectus.
If you invest through a brokerage firm or other financial institution, the policies and fees may be different than those described in this prospectus. Financial advisers, financial supermarkets, brokerage firms, and other
financial institutions may charge transaction and other fees and may set different minimum investments or limitations on buying or selling shares. Consult a representative of your financial institution if you have any questions.
When shares are purchased this way, the financial intermediary may:
-
charge a fee for its services;
-
act as the shareholder of record of the shares;
-
set different minimum initial and additional investment requirements;
-
impose other charges and restrictions;
-
designate intermediaries to accept purchase and sale orders on the Fund's behalf; or
-
impose an earlier cut-off time for purchase and redemption requests.
The Fund considers a purchase or sale order as received when a financial intermediary receives the order in proper form before 4:00 p.m. Eastern Time. These orders will be priced based on the Fund's NAV, plus any applicable
sales charge, next computed after such order is received by the financial intermediary. It is the responsibility of the financial intermediary to transmit properly completed purchase orders to the Fund in a timely manner. Any change in price due to
the failure of a Fund to timely receive an order must be settled between the investor and the financial intermediary placing the order.
Shares held through an intermediary may be transferred into your name following procedures established by your intermediary and the Fund. Certain intermediaries may receive compensation from the Fund, the Adviser or their
affiliates.
Fund Direct Purchases
You may also purchase shares directly through the Fund’s transfer agent. Your purchase order will be priced based on the Fund’s NAV, plus any applicable sales charge, next computed after your order is received by the
Fund. If you are investing directly in the Fund for the first time, you will need to establish an account by completing a Shareholder Account Application (To establish an IRA, complete an IRA Application). To request an application, call toll-free
1-877-385-2720. Your initial investment minimum can be found in the table below. The Fund reserves the right to change the amount of these minimums from time to time or to waive them in whole or in part for certain accounts. Investment minimums may
be higher or lower to investors purchasing shares through a brokerage firm or other financial institution.
Sales Charges
Shares of the Fund are purchased at their NAV plus any applicable sales charge. This is known as the public offering price.
The Fund's Distributor compensates financial intermediaries (broker-dealers), including processing organizations, who sell shares of the Funds. Compensation comes from sales charges, Rule 12b-1 fees and payments by the
Adviser.
Prospectus 10
To obtain free information regarding sales charges and the reduction or elimination or waiver of sales charges on Class A shares, visit www.neimanfunds.com or call 1-877-385-2720. You also may contact your financial intermediary.
Class A Shares
The public offering price for Class A shares of the Fund is the next determined NAV plus a sales charge, unless you qualify for a waiver of the sales charge. The table below shows the amount of sales charge you would pay at different levels of investment and the commissions paid to financial intermediaries at each level of investment.
|
|
Sales Charge as a % of
|
|
|
|
|
|
Public
|
|
Net
|
|
Financial
|
|
|
|
Offering
|
|
Amount
|
|
Intermediary
|
|
|
|
Price
|
|
Invested
|
|
Commission
1
|
|
|
Amount of Investment
|
|
|
|
|
|
|
|
Less than $50,000
|
5.75%
|
|
6.10%
|
|
5.00%
|
|
|
$50,000 but less than $100,000
|
4.50%
|
|
4.71%
|
|
3.75%
|
|
|
$100,000 but less than $250,000
|
3.75%
|
|
3.90%
|
|
3.00%
|
|
|
$250,000 but less than $500,000
|
3.00%
|
|
3.09
%
|
|
2.50%
|
|
|
$500,000 but less than $1,000,000
|
2.00%
|
|
2.04%
|
|
1.50%
|
|
|
$1,000,000 or more
|
None
|
|
None
|
|
None
|
|
|
1
As a percentage of the public offering price.
|
|
|
|
|
|
|
The Adviser may make a payment to financial intermediaries for your cumulative investments of $1 million or more of Class A shares. The Adviser may withhold these payments with respect to short-term investments. If you purchase $1 million or more of Class A shares of the Fund and are not assessed a sales charge at the time of purchase, you may be charged the equivalent of up to 1.00% of the amount invested if you redeem any or all of the Class A shares of a Fund during the first 18 months after purchase. This charge applies to all your purchases. See Finders' Fee Commissions in the Statement of Additional Information for more details.
The Fund permits you to reduce the initial sales charge you pay on Class A shares by using the Right of Accumulation or a Letter of Intent. Each of these methods for reducing the initial sales charge on Class A shares is described below. In taking advantage of these methods for reducing the initial sales charge you will pay, you may link your purchases of shares with purchases of shares in accounts owned by your spouse or children under the age of 21 who share your residential address. It is your responsibility when investing to inform your financial intermediary or the Fund that you would like to have one or more accounts linked together for purposes of reducing the initial sales charge.
Right of Accumulation:
You may qualify for a reduction in the initial sales charge for future purchases of Class A shares based on the current market value of your Class A holdings from prior purchases through the Right of Accumulation. To calculate the sales charge applicable to your net purchase of Class A shares, you may aggregate your investment with the current market value of any Class A shares of the Fund held in:
|
1.
|
Your account(s);
|
|
|
|
2.
|
Your spouse's account(s);
|
|
|
|
3.
|
Joint accounts with qualified spouse;
|
|
|
|
4.
|
Account(s) of children under the age of 21 who share your residential address;
|
|
|
|
5.
|
Trust accounts established by any of the individuals in items (1) through (3) above. If the person(s) who established the trust is deceased, the trust account may be aggregated with the account(s) of the primary beneficiary of the trust;
|
|
|
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6.
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Solely controlled business accounts; and
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|
|
|
7.
|
Single-participant retirement plans of any of the individuals in items (1) through (3) above.
|
|
|
Prospectus 11
In order to obtain any reduction in the initial sales charge, you must, before purchasing Class A shares, inform the Fund or your financial intermediary if you have any of the above types of accounts that can be aggregated with your current investment in Class A shares to reduce the applicable sales charge. In order to verify your eligibility for a reduced sales charge, you may be required to provide appropriate documentation, such as an account statement or the social security or tax identification number on an account, so that the Fund may verify (1) the number of shares of the Fund held in your account(s) with the Fund, (2) the number of shares of the Fund held in your account(s) with a financial intermediary, and (3) the number of shares of the Fund held in an account with a financial intermediary owned by your spouse or by children under the age of 21 who share your residential address.
Letter of Intent:
You may purchase Class A shares at the sales charge rate applicable to the total amount of the purchases you intend to make over a 13-month period. The Fund will combine the value of your current purchases with the current value of any Class A shares you purchased previously for (i) your account, (ii) your spouse's account, (iii) a joint account with your spouse, or (iv) your minor children's trust or custodial accounts. In calculating the total amount of purchases, you may include in your letter purchases made up to 90 days before the date of the Letter of Intent. A fiduciary purchasing shares for the same fiduciary account, trust or estate may also consider the value of Class A shares purchased previously that were sold subject to a sales charge. In other words, a Letter of Intent allows you to purchase Class A shares of the Fund over a 13-month period and receive the same sales charge as if you had purchased all the shares at the same time. The Fund will also consider the value of Class A shares sold at NAV. Class A shares purchased with dividends or distributions will not be included in the calculation. To be entitled to a reduced sales charge on the purchase of Class A shares based on shares you intend to purchase over the 13-month period, you must send the Fund a Letter of Intent. The 13-month period begins on the date of the first purchase, including those purchases made in the 90-day period before the date of the Letter of Intent. Please note that the purchase price of these prior purchases will not be adjusted.
You are not legally bound by the terms of your Letter of Intent to purchase the amount of shares stated in the Letter of Intent. The Letter of Intent does, however, authorize the Fund to hold in escrow 5.00% of the total amount you intend to purchase. If you do not complete the total intended purchase of Class A shares at the end of the 13-month period, the Fund's transfer agent will redeem the necessary portion of the escrowed shares to make up the difference between the reduced sales charge rate (based on the amount you intended to purchase) and the sales charge rate that would normally apply (based on the actual amount you purchased).
Additional information regarding the reduction of Class A sales charges is available in the Fund’s Statement of Additional Information. To take advantage of the Right of Accumulation and/or a Letter of Intent, contact the Fund or your financial intermediary. To determine if you are eligible for these programs or to request a copy of the Statement of Additional Information, call 1-877-385-2720 between the hours of 8:30 a.m. and 6:00 p.m. Eastern Time on days the Funds are open for business. These programs may be terminated or amended at any time.
Sales Charge Waivers
Sales charges may be waived and no sales charge is imposed on Class A shares of the Fund if the shares were:
1. Bought by officers, directors or trustees, and employees and their immediate family members (i.e., spouses, children, grandchildren, parents, grandparents and any dependent of the person, as defined in section 152 of the Internal Revenue Code) of:
• Neiman Funds;
• Neiman Funds Management LLC and its subsidiaries and affiliates;
• The Distributor and its subsidiaries and affiliates; or
Prospectus 12
• Broker-dealers or financial institutions that have entered into dealer agreements with the Fund or their principal underwriter and their subsidiaries and affiliates (or otherwise have an arrangement with a broker-dealer or financial institution with respect to sales of Fund shares).
2. Bought by advisory clients of Neiman Funds Management LLC and its subsidiaries and affiliates.
3. Bought by certain retirement and deferred compensation plans, and trusts used to fund those plans, including, but not limited to, those plans qualified under sections 401(k), 403(b) or 457 of the Internal Revenue Code and “rabbi trusts.”
4. Bought by financial intermediaries who have a dealer arrangement with the Distributor, who place trades for their own accounts or for the accounts of their clients and who charge a management, asset allocation, consulting or other fee for their services, or clients of such financial intermediaries who place trades for their own accounts if the accounts are linked to the master account of such financial intermediary.
5. Bought by an investment adviser, broker-dealer or financial planner, provided arrangements are pre-approved.
6. Bought by a bank, trust company or thrift institution which is acting as a fiduciary exercising investment discretion, provided that appropriate notification of such a fiduciary relationship is reported at the time of the investment to the Fund or the Fund's Distributor.
7. Bought by employer-sponsored health savings accounts.
8. Bought with proceeds from the sale of Class A shares of the Fund, but only if the purchase is made within 90 days of the sale or distribution. Appropriate documentation may be required. Exercising the reinvestment privilege will not affect the character of any gain or loss realized on the redemption for federal income tax purposes, except that if the redemptions resulted in a loss, the reinvestment may result in the loss being disallowed under the “wash sale” rules.
9. Bought in connection with plans of reorganizations of the Fund, such as mergers, asset acquisitions and exchange offers to which the Fund is a party.
10. Bought by a “charitable organization” as defined for purposes of Section 501(c)(3) of the Internal Revenue Code, or by a charitable remainder trust or life income pool established for the benefit of a charitable organization.
To take advantage of any of these sales charge waivers, you must qualify for such waiver. To see if you qualify, call 1-877-385-2720 between the hours of 8:00 a.m. and 6:00 p.m. Eastern Time on days the Fund is open for business or contact your financial intermediary. These waivers may not continue indefinitely and may be discontinued at any time without notice.
Rule 12b-1 Fees
The Fund has adopted a Distribution Plan under Rule 12b-1 for Class A Shares that allows it to pay distribution and other fees for the sale and distribution of its shares and for services provided to shareholders. These fees are called “Rule 12b-1 fees.” Rule 12b-1 fees are paid by the Fund to the Distributor as compensation for its services and expenses in connection with the distribution of Class A Shares of the Fund. The Distributor may pay any or all amounts received under the Rule 12b-1 Plan to other persons, including the Adviser, for any distribution, promotional or shareholder support services. The Class A shares pay an annual Rule 12b-1 fee equal to 0.25% of its average daily net assets. Up to 0.25% of the 12b-1 fee may be used as a shareholder servicing fee. Because these fees are paid out of the Fund's assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
Prospectus 13
Minimum Investments (No-Load Shares and Class A Shares)
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|
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Initial
|
|
Additional
|
|
|
Regular Account
|
|
$1,000
|
|
$100
|
|
|
Automatic Investment Plan
|
|
$500
|
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$100
|
*
|
|
IRA Account
|
|
$500
|
|
$100
|
|
*An Automatic Investment Plan requires a $100 minimum automatic monthly or quarterly investment.
All purchases must be made in U.S. dollars and checks must be drawn on U.S. banks. No cash, money orders, travelers checks, credit cards, credit card checks, third party checks or other checks deemed to be high-risk checks will be accepted. A $20 fee will be charged against your account for any payment check returned to the transfer agent or for any incomplete electronic fund transfer, or for insufficient funds, stop payment, closed account or other reasons. If a check does not clear your bank or the Fund is unable to debit your predesignated bank account on the day of purchase, the Fund reserves the right to cancel the purchase. If your purchase is canceled, you will be responsible for any fees imposed by your bank and any losses that may be incurred as a result of a decline in the value of the canceled purchase. The Fund (or Fund agent) has the authority to redeem shares in your account(s) to cover any losses due to fluctuations in share price. Any profit on such cancellation will accrue to the Fund. Your investment in the Fund should be intended to serve as a long-term investment vehicle. The Fund is not designed to provide you with a means of speculating on the short-term fluctuations in the stock market. The Fund reserves the right to reject any purchase request that it regards as disruptive to the efficient management of the Fund, which includes investors with a history of excessive trading. The Fund also reserves the right to stop offering shares at any time.
Types of Account Ownership
You can establish the following types of accounts by completing a Shareholder Account Application:
•
Individual or Joint Ownership
Individual accounts are owned by one person. Joint accounts have two or more owners.
•
A Gift or Transfer to Minor
(UGMA or UTMA)
A UGMA/UTMA account is a custodial account managed for the benefit of a minor. To open an UGMA or UTMA account, you must include the minor’s social security number on the application.
•
Trust
An established trust can open an account. The names of each trustee, the name of the trust and the date of the trust agreement must be included on the application.
•
Business Accounts
Corporation and partnerships may also open an account. The application must be signed by an authorized officer of the corporation or a general partner of a partnership.
•
IRA Accounts
See “Tax-Deferred Plans” on page 16.
Prospectus 14
Instructions For Opening and Adding to an Account
TO OPEN AN ACCOUNT
By Mail
Complete and sign the Shareholder Application or an IRA Application
Make your check payable to Neiman Large Cap Value Fund • For IRA accounts, please specify the year for which the contribution is made.
Mail the application and check to:
Neiman Large Cap Value Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
|
TO ADD TO AN ACCOUNT
By Mail
Complete the investment slip that is included with your account statement, and write your account number on your check. If you no longer have your investment slip, please reference your name, account number, and address on your check.
Mail the slip and the check to:
Neiman Large Cap Value Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
|
TO OPEN AN ACCOUNT
By Wire
Call 1-877-385-2720 for instructions and and to obtain an investor account number or an IRA account number prior to wiring to the Fund.
TO ADD TO AN ACCOUNT
By Wire
Call 1-877-385-2720 for instructions.
Telephone and Wire Transactions
With respect to all transactions made by telephone, the Fund and its transfer agent will employ reasonable procedures to confirm that instructions communicated by telephone are genuine. Such procedures may include, among others, requiring some form of personal identification prior to acting upon telephone instructions, providing written confirmation of all such transactions, and/or tape recording all telephone instructions. If reasonable procedures are followed, then neither the Fund nor the transfer agent will be liable for any loss, cost, or expense for acting upon an investor's telephone instructions or for any unauthorized telephone redemption. In any instance where the Fund’s transfer agent is not reasonably satisfied that instructions received by telephone are genuine, neither the Fund nor the transfer agent shall be liable for any losses which may occur because of delay in implementing a transaction.
If you purchase your initial shares by wire, the transfer agent first must have received a completed account application and issued an account number to you. The account number must be included in the wiring instructions as set forth on the previous page. The transfer agent must receive your account application to establish shareholder privileges and to verify your account information. Payment of redemption proceeds may be delayed and taxes may be withheld unless the Fund receives a properly completed and executed account application.
Shares purchased by wire will be purchased at the NAV next determined after the transfer agent receives your wired funds and all required information is provided in the wire instructions. If the wire is not received by 4:00 p.m. Eastern time, the purchase will be effective at the NAV next calculated after receipt of the wire.
Prospectus 15
Tax-Deferred Plans
If you are eligible, you may set up one or more tax-deferred accounts. A tax-deferred account allows you to defer income taxes due on your investment income and capital gains. A contribution to certain of these plans may also be tax deductible. Tax-deferred accounts include the retirement plans described below. Distributions from these plans are generally subject to an additional tax if withdrawn prior to age 59 1/2 or used for a nonqualifying purpose. Investors should consult their tax adviser or legal counsel before selecting a tax-deferred account.
US Bank N.A.
, serves as the custodian for the tax-deferred accounts offered by the Fund. You will be charged an annual account maintenance fee of $8 for each tax-deferred account you have with the Fund. You may pay the fee by check or have it automatically deducted from your account (usually in December). The custodian reserves the right to change the amount of the fee or to waive it in whole or part for certain types of accounts.
Types of Tax-Deferred Accounts
• Traditional IRA
An individual retirement account. Your contribution may or may not be deductible depending on your circumstances. Assets can grow tax-deferred and distributions are taxable as income.
• Roth IRA
An IRA with non-deductible contributions, tax-free growth of assets, and tax-free distributions for qualified distributions.
• Spousal IRA
An IRA funded by a working spouse in the name of a non-earning spouse.
• SEP-IRA
An individual retirement account funded by employer contributions. Your assets grow tax-deferred and distributions are taxable as income.
• Keogh or Profit Sharing Plans
These plans allow corporations, partnerships and individuals who are self-employed to make tax-deductible contributions of up to $35,000 for each person covered by the plans.
• 403(b) Plans
An arrangement that allows employers of charitable or educational organizations to make voluntary salary reduction contributions to a tax-deferred account.
• 401(k) Plans
Allows employees of corporations of all sizes to contribute a percentage of their wages on a tax-deferred basis. These accounts need to be established by the trustee of the plan.
Automatic Investment Plans
By completing the Automatic Investment Plan section of the account application, you may make automatic monthly or quarterly investments ($100 minimum per purchase) in the Fund from your bank or savings account. Your initial investment minimum is $500 if you select this option. Shares of the Fund may also be purchased through direct deposit plans offered by certain employers and government agencies. These plans enable shareholders to have all or a portion of their payroll or Social Security checks transferred automatically to purchase shares of the Fund.
Prospectus 16
FOR INVESTING
Automatic Investment Plan
For making automatic investments from a designated bank account.
Payroll Direct Deposit Plan
For making automatic investments from your payroll check.
Dividend Reinvestment
All income dividends and capital gains distributions will be automatically reinvested in shares of the Fund unless you indicate otherwise on the account application or in writing.
Instructions For Selling Fund Shares
You may sell all or part of your shares on any day that the New York Stock Exchange is open for trading. Your shares will be sold at the next NAV per share calculated after your order is received in proper form by the transfer
agent. The proceeds of your sale may be more or less than the purchase price of your shares, depending on the market value of the Fund's securities at the time of your sale. Your order will be processed promptly and you will generally receive the
proceeds within seven days after receiving your properly completed request. The Fund will not mail any proceeds unless your investment check has cleared the bank, which may take up to 15 calendar days. This procedure is intended to protect the Fund
and its shareholders from loss. If the dollar or share amount requested is greater than the current value of your account, your entire account balanced will be redeemed. If you choose to redeem your account in full, any automatic services currently
in effect for the account will be terminated unless you indicate otherwise in writing.
TO SELL SHARES
By Mail
Write a letter of instruction that includes:
-
The names(s) and signature(s) of all account owners.
-
Your account number.
-
The dollar or share amount you want to sell.
-
Where to send the proceeds.
-
If redeeming from your IRA, please note applicable withholding requirements.
-
Obtain a signature guarantee or other documentation, if required.
Mail your request to:
Neiman Large Cap Value Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
|
By overnight courier, send to:
Neiman Large Cap Value Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
|
Prospectus 17
By Telephone
-
You will automatically be granted
telephone redemption privileges
unless you decline them in writing
or indicate on the appropriate sec-
tion of the account application that
you decline this option. Otherwise,
you may redeem Fund shares by
calling 1-877-385-2720. Redemption
proceeds will only be mailed to your
address of record.
-
You may only redeem a maximum of
$25,000 per day by telephone.
-
You will not be able to redeem by
telephone and have a check sent to
your address of record for a period of
15 days following an address change.
-
Unless you decline telephone
privileges in writing or on your
account application, as long as the
Fund takes reasonable measures to
verify the order, you may be respon-
sible for any fraudulent telephone order.
For specific information on how to redeem your account, and to determine if a signature guarantee or other documentation is required, please call toll-free in the U.S.1-877-385-2720.
Additional Redemption Information
Signature Guarantees
Signature guarantees are designed to protect both you and the Fund from fraud. A signature guarantee of each owner is required to redeem shares in the following situations:
-
If you change ownership on your account.
-
If you request the redemption proceeds to be sent to a different address than that registered on
the account.
-
If a change of address request has been received by the Transfer Agent within the last 15 days.
-
If you wish to redeem $25,000 or more from any shareholder account.
Signature guarantees can be obtained from most banks, savings and loan associations, trust companies, credit unions, broker/dealers, and member firms of a national securities exchange. Call your financial institution to see if they have the ability to guarantee a signature.
A notary public cannot provide signature guarantees.
The Fund reserves the right to require a signature guarantee under other circumstances or to delay a redemption when permitted by Federal Law. For more information pertaining to signature guarantees, please call 1-877-385-2720.
Corporate, Trust and Other Accounts
Redemption requests from corporate, trusts, and other accounts may require documents in addition to those described above, evidencing the authority of the officers, trustees or others. In order to avoid delays in processing redemption requests for these accounts, you should call the Transfer Agent at 1-877-385-2720 to determine what additional documents are required.
Address Changes
To change the address on your account, call the transfer agent at 1-877-385-2720 or send a written request signed by all account owners. Include the account number(s) and name(s) on the account and both the old and new addresses. Certain options may be suspended for a period of 15 days following an address change.
Prospectus 18
Transfer of Ownership
In order to change the account registration or transfer ownership of an account, additional documents will be required. In order to avoid delays in processing these requests, you should call the transfer agent at 1-877-385-2720
to determine what additional documents are required.
Redemption Initiated by the Fund
Because there are certain fixed costs involved with maintaining your account, the Fund may require you to redeem all of your shares if your account balance falls below $2,500. After your account balance falls below the
minimum balance, you will receive a notification from the Fund indicating its intent to close your account along with instructions on how to increase the value of your account to the minimum amount within 60 days. If your account balance is still
below $2,500 after 60 days, the Fund may close your account and send you the proceeds. This minimum balance requirement does not apply to accounts using automatic investment plans, to IRAs, and to other tax-sheltered investment accounts. The
right of redemption by the Fund will not apply if the value of your account balance falls below $500 because of market performance. All shares of the Fund are also subject to involuntary redemption if the Board of Trustees determines to
liquidate the Fund. Any involuntary redemption will create a capital gain or loss, which may have tax consequences about which you should consult your tax adviser.
Shareholder Communications
Account Statements
Every quarter, shareholders of the Fund will automatically receive regular account statements. You will also be sent a yearly statement detailing the tax characteristics of any dividends and distributions you have
received.
Confirmations
Confirmation statements will be sent after each transaction that affects your account balance or account registration.
Regulatory Mailings
Financial reports will be sent at least semiannually. Annual reports will include audited financial statements. To reduce expenses, one copy of each report will be mailed to each taxpayer identification number even though the
investor may have more than one account in the Fund.
Statement of Additional Information
The Statement of Additional Information contains additional and more detailed information about the Fund, and is considered to be a part of this Prospectus. Additional information about the Fund's investments is available in the Fund's annual and semi-annual reports to shareholders. In the Fund's annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.
There are three ways to get a copy of these documents.
1. Call or write, and a copy will be sent without charge.
Neiman Large Cap Value Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
1-877-385-2720
www.neimanfunds.com
2. Call or write the Public Reference Section of the Securities and Exchange Commission
("SEC") and ask them to mail you a copy. The SEC charges a fee for this service. You can
also review and copy information about the Fund in person at the SEC Public Reference
Room in Washington D.C.
Public Reference Section of the SEC
Washington D.C. 20549-0102
1-202-551-8090
Copies of these documents may also be obtained, after paying a duplication fee, by elec-
tronic request at the following e-mail address: publicinfo@sec.gov
3. Go to the SEC's website (www.sec.gov) and download a text-only version.
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Neiman Funds SEC file number 811-21290
No dealer, salesman, or other person has been authorized to give any information or to make any representations, other than those contained in this Prospectus, and, if given or made, such other information or representations must not be relied upon as having been authorized by the Funds or the Adviser. This Prospectus does not constitute an offering in any state in which such offering may not lawfully be made.
Neiman Large Cap Value F
und
6631 Main Street
Williamsville, New York 14221
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NEIMAN LARGE CAP VALUE FUND
No-Load Shares (NEIMX)
Class A Shares (NEAMX)
STATEMENT OF ADDITIONAL INFORMATION
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This Statement of Additional Information (“SAI“) is not a prospectus. It should be read in conjunction with the Prospectus of the Neiman Large Cap Value Fund dated August 1, 2013. The Fund’s Annual Report to Shareholders, as filed with the Securities and Exchange Commission on June 5, 2013, has been incorporated by reference into this SAI. A free copy of the Prospectus or Annual Report can be obtained by writing the Transfer Agent at 8000 Town Centre Drive, Suite 400, Broadview Heights, OH 44147 or by calling 1-877-385-2720.
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TABLE OF CONTENTS
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DESCRIPTION OF THE TRUST AND THE FUND
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1
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ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
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1
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INVESTMENT LIMITATIONS
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5
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THE INVESTMENT ADVISER
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7
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THE PORTFOLIO MANAGERS
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7
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TRUSTEES AND OFFICERS
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9
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BOARD INTEREST IN THE FUND
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12
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COMPENSATION
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13
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CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
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13
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AUDIT COMMITTEE
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14
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PORTFOLIO TRANSACTIONS AND BROKERAGE
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14
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ADDITIONAL TAX INFORMATION
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15
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PRICING OF FUND SHARES
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17
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SHARES OF THE FUND
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17
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DISTRIBUTION PLAN (Class A Shares)
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20
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PURCHASE AND SALES THROUGH BROKER DEALERS
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22
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ANTI-MONEY LAUNDERING PROGRAM
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22
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CUSTODIAN
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23
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FUND SERVICES
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23
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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23
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DISTRIBUTOR
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23
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DISCLOSURE OF PORTFOLIO HOLDINGS
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24
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FINANCIAL STATEMENTS
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24
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PROXY VOTING STATEMENT
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24
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-i-
DESCRIPTION OF THE TRUST AND THE FUND
The Neiman Large Cap Value Fund (the “Fund”) was organized as a non-diversified series of Neiman Funds (the “Trust”) on January 3, 2003 and commenced operations on April 1, 2003. The Trust is an
open-end investment company established under the laws of Ohio by an Agreement and Declaration of Trust dated January 3, 2003 (the “Trust Agreement”) consisting of three series. The Trust Agreement permits the Trustees to issue an
unlimited number of shares of beneficial interest of separate series without par value. The investment adviser to the Fund is Neiman Funds Management LLC (the “Adviser”).
The Fund does not issue share certificates. All shares are held in non-certificate form registered on the books of the Fund and the Fund's transfer agent for the account of the shareholder. Each share of a series
represents an equal proportionate interest in the assets and liabilities belonging to the applicable class of the series with each other share of that series and is entitled to such dividends and distributions out of income belonging to the
applicable class of the series as are declared by the Trustees. The shares do not have cumulative voting rights or any preemptive or conversion rights, and the Trustees have the authority from time to time to divide or combine the shares of any
series into a greater or lesser number of shares of that series so long as the proportionate beneficial interest in the assets belonging to that series and the rights of shares of any other series are in no way affected. In case of any liquidation
of a series, the holders of shares of the series being liquidated will be entitled to receive as a class a distribution out of the assets, net of the liabilities, belonging to that series. Expenses attributable to any series or class are borne by
that series or class, and thus net asset values per share of the class may differ. Any general expenses of the Trust not readily identifiable as belonging to a particular series are allocated by or under the direction of the Trustees in such manner
as the Trustees determine to be fair and equitable. No shareholder is liable to further calls or to assessment by the Trust without his or her express consent.
For information concerning the purchase and redemption of shares of the Fund, see “How to Buy Shares and Sell Shares” in the Prospectus. For a description of the methods used to determine the share price and
value of the Fund's assets, see “Pricing of Fund Shares” in the Prospectus and “Pricing of Fund Shares” in this Statement of Additional Information.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a discussion of some of the investments the Fund may make and some of the techniques it may use.
A. Equity Securities. The Fund may invest in equity securities such as common stock, convertible preferred stock, convertible bonds, rights and warrants. Common stocks, the most familiar type, represent an equity
(ownership) interest in a corporation. Warrants are options to purchase equity securities at a specified price for a specific time period. Rights are similar to warrants, but normally have a short duration and are distributed by the issuer to its
shareholders. Although equity securities have a history of long term growth in value, their prices fluctuate based on changes in a company's financial condition and on overall market and economic conditions.
Equity securities also include SPDRs (S&P Depositary Receipts, known as “Spiders”), DIAMONDS, QQQQs and a number of other exchange traded funds. SPDRs represent ownership in the SPDR Trust, a unit
investment trust that holds a portfolio of common stocks that closely tracks the price performance and dividend yield of the S&P 500 Composite Price Index. SPDRs trade on the American Stock Exchange under the symbol SPY. A MidCap SPDR is similar
to a SPDR except that it tracks the performance of the S&P MidCap 400 Index and trades on the American Stock Exchange under the symbol MDY. DIAMONDS represent ownership in the DIAMONDS Trust, a unit investment trust that serves as an index to
the Dow Jones Industrial Average (the “Dow”) in that its holding consists of the 30 component stocks of the Dow. DIAMONDS trade on the American Stock Exchange under the symbol DIA. QQQQs (PowerShares QQQ) represent ownership in the
NASDAQ-100 Trust, a unit investment trust that attempts to closely track the price and yield performance of the NASDAQ 100 Index by holding shares of all the companies in the Index. QQQQs trade on the American Stock Exchange under the symbol QQQQ.
The Fund may also invest in a variety of other exchange traded funds, including, but not limited to, iShares, HOLDRs, Fidelity Select Portfolios, Select Sector SPDRs, Fortune e-50, Fortune 500 and streetTRACK. To the extent the Fund invests in a
sector product, the Fund is subject to the risks associated with that sector. Additionally, the Fund may invest in new exchange traded shares as they become available.
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B. Options Transactions. The Fund may engage in option transactions involving individual securities and stock indexes. An option involves either: (a) the right or the obligation to buy or sell a specific instrument at a
specific price until the expiration date of the option; or (b) the right to receive payments or the obligation to make payments representing the difference between the closing price of a stock index and the exercise price of the option expressed in
dollars times a specified multiple until the expiration date of the option. Options are sold (written) on securities and stock indexes. The purchaser of an option on a security pays the seller (the writer) a premium for the right granted but is not
obligated to buy or sell the underlying security. The purchaser of an option on a stock index pays the seller a premium for the right granted, and in return the seller of such an option is obligated to make the payment. A writer of an option may
terminate the obligation prior to expiration of the option by making an offsetting purchase of an identical option. Options are traded on organized exchanges and in the over-the-counter market. To cover the potential obligations involved in writing
options, the Fund will either: (a) own the underlying security, or in the case of an option on a market index, will hold a portfolio of stocks substantially replicating the movement of the index; or (b) the Fund will segregate with the custodian
liquid assets sufficient to purchase the underlying security or equal to the market value of the stock index option, marked to market daily.
The purchase and writing of options requires additional skills and techniques beyond normal portfolio management, and involves certain risks. The purchase of options limits the Fund's potential loss to the amount of the
premium paid and can afford the Fund the opportunity to profit from favorable movements in the price of an underlying security to a greater extent than if transactions were effected in the security directly. However, the purchase of an option could
result in the Fund losing a greater percentage of its investment than if the transaction were effected directly. When the Fund writes a call option, it will receive a premium, but it will give up the opportunity to profit from a price increase in
the underlying security above the exercise price as long as its obligation as a writer continues, and it will retain the risk of loss should the price of the security decline. When the Fund writes a put option, it will assume the risk that the price
of the underlying security or instrument will fall below the exercise price, in which case the Fund may be required to purchase the security or instrument at a higher price than the market price of the security or instrument. In addition, there can
be no assurance that the Fund can effect a closing transaction on a particular option it has written. Further, the total premium paid for any option may be lost if the Fund does not exercise the option or, in the case of over-the-counter options,
the writer does not perform its obligations.
C. Foreign Securities. The Fund may invest in foreign equity securities including American Depositary Receipts (“ADRs”). ADRs are certificates evidencing ownership of shares of a foreign-based issuer held in
trust by a bank or similar financial institution. They are alternatives to the direct purchase of the underlying securities in their national markets and currencies. ADRs are subject to risks similar to those associated with direct investment in
foreign securities.
Foreign investments can involve significant risks in addition to the risks inherent in U.S. investments. The value of securities denominated in or indexed to foreign currencies, and of dividends and interest from such
securities, can change significantly when foreign currencies strengthen or weaken relative to the U.S. dollar. Foreign securities markets generally have less trading volume and less liquidity than U.S. markets, and prices on some foreign markets can
be highly volatile. Many foreign countries lack uniform accounting and disclosure standards comparable to those applicable to U.S. companies, and it may be more difficult to obtain reliable information regarding an issuer’s financial condition
and operations. In addition, the costs of foreign investing, including withholding taxes, brokerage commissions, and custodial costs, generally are higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets. Foreign issuers, brokers, and securities markets may be subject to less government supervision. Foreign security trading practices, including
those involving the release of assets in advance of payment, may invoke increased risks in the event of a failed trade or the insolvency of a broker-dealer, and may involve substantial delays. It also may be difficult to enforce legal rights in
foreign countries.
Investing abroad also involves different political and economic risks. Foreign investments may be affected by actions of foreign governments adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation, restrictions on U.S. investment or on the ability to repatriate assets or convert currency into U.S. dollars, or other government intervention. There may be a greater
2
possibility of default by foreign governments or foreign government-sponsored enterprises. Investments in foreign countries also involve a risk of local political, economic or social instability, military action or unrest, or adverse diplomatic
developments. There is no assurance that an advisor will be able to anticipate or counter these potential events and their impacts on the Fund’s share price.
The considerations noted above generally are intensified for investments in developing countries. Developing countries may have relatively unstable governments, economies based on only a few industries and securities
markets that trade a small number of securities.
D. Short Sales. The Fund may sell a security short in anticipation of a decline in the market value of the security. When the Fund engages in a short sale, it sells a security which it does not own. To complete the
transaction, the Fund must borrow the security in order to deliver it to the buyer. The Fund must replace the borrowed security by purchasing it at the market price at the time of replacement, which may be more or less than the price at which the
Fund sold the security. The Fund will incur a loss as a result of the short sale if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund will realize a profit
if the security declines in price between those dates. Any potential gain is limited to the price at which the Fund sold the security short, and any potential loss is unlimited in size.
In connection with its short sales, the Fund will be required to maintain a segregated account with the Fund's custodian of cash or liquid assets equal to (i) the current market value of the securities sold short, less
(ii) any collateral deposited with its broker (not including the proceeds from the short sales). Depending on arrangements made with the broker or custodian, the Fund may not receive any payments (including interest) on collateral deposited with the
broker or custodian.
E. Securities Lending. The Fund may make long and short term loans of its portfolio securities to parties such as broker-dealers, banks, or institutional investors. Securities lending allows the Fund to retain ownership
of the securities loaned and, at the same time, to earn additional income. Since there may be delays in the recovery of loaned securities, or even a loss of rights in collateral supplied, should the borrower fail financially, loans will be made only
to parties whose creditworthiness has been reviewed and deemed satisfactory by the Adviser. Furthermore, they will only be made if, in the judgment of the Adviser, the consideration to be earned from such loans would justify the risk.
The Adviser understands that it is the current view of the staff of the Securities and Exchange Commission (the “SEC”) that the Fund may engage in loan transactions only under the following conditions: (1) the
Fund must receive 100% collateral in the form of cash, cash equivalents (e.g., U.S. Treasury bills or notes) or other high grade liquid debt instruments from the borrower; (2) the borrower must increase the collateral whenever the market value of
the securities loaned (determined on a daily basis) rises above the value of the collateral; (3) after giving notice, the Fund must be able to terminate the loan at any time; (4) the Fund must receive reasonable interest on the loan or a flat fee
from the borrower, as well as amounts equivalent to any dividends, interest, or other distributions on the securities loaned and to any increase in market value; (5) the Fund may pay only reasonable custodian fees in connection with the loan; and
(6) the Board of Trustees must be able to vote proxies on the securities loaned, either by terminating the loan or by entering into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any security in which the Fund is authorized to invest. Investing this cash subjects that investment, as well as the security loaned, to market forces (i.e.,
capital appreciation or depreciation).
F. Restricted and Illiquid Securities. The portfolio of the Fund may contain illiquid securities. Illiquid securities generally include securities which cannot be disposed of promptly and in the ordinary course of
business without taking a reduced price. Securities may be illiquid due to contractual or legal restrictions on resale or lack of a ready market. The following securities are considered to be illiquid: repurchase agreements and reverse repurchase
agreements maturing in more than seven days, nonpublicly offered securities and restricted securities. Restricted securities are securities the resale of which is subject to legal or contractual restrictions. Restricted securities may be sold only
in privately negotiated transactions, in a public offering with respect to which a registration statement is in effect under the Securities Act of 1933 or pursuant to Rule 144 or Rule 144A promulgated under such Act. Where registration is required,
the Fund may be obligated to pay all or part of the registration expense, and a considerable
3
period may elapse between the time of the decision to sell and the time such security may be sold under an effective registration statement. If during such a period adverse market conditions were to develop, the Fund might obtain a less favorable
price than the price it could have obtained when it decided to sell. The Fund will not invest more than 15% of its net assets in illiquid securities.
With respect to Rule 144A securities, these restricted securities are treated as exempt from the 15% limit on illiquid securities, provided that a dealer or institutional trading market in such securities exists. The
Fund will not, however, invest more than 10% of its net assets in Rule 144A securities. Under the supervision of the Board of Trustees, the Adviser determines the liquidity of restricted securities and, through reports from the Adviser, the Board of
Trustees will monitor trading activity in restricted securities. If institutional trading in restricted securities were to decline, the liquidity of the Fund could be adversely affected.
G. U.S. Government Securities. U.S. government securities are high-quality debt securities issued or guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S. government. Not all U.S. government
securities are backed by the full faith and credit of, or guaranteed by, the United States Treasury. For example, securities issued by the Farm Credit Banks or by the Federal National Mortgage Association (“Fannie Mae”) are supported by
the instrumentality's right to borrow money from the U.S. Treasury under certain circumstances. However, on September 7, 2008, the U.S. Treasury Department and the Federal Housing Finance Authority (the “FHFA”) announced that Fannie Mae
and The Federal Home Loan Mortgage Corporation (“Freddie Mac”) had been placed into conservatorship, a statutory process designed to stabilize a troubled institution with the objective of returning the entity to normal business operations.
The U.S. Treasury Department and the FHFA at the same time established a secured lending facility and a Secured Stock Purchase Agreement with both Fannie Mae and Freddie Mac to ensure that each entity had the ability to fulfill its financial
obligations. The FHFA announced that it does not anticipate any disruption in pattern of payments or ongoing business operations of Fannie Mae or Freddie Mac. Securities issued by other agencies or instrumentalities are supported only by the credit
of the entity that issued them.
H. Corporate Debt Securities. Corporate debt securities are long and short term debt obligations issued by companies (such as publicly issued and privately placed bonds, notes and commercial paper). The Adviser
considers corporate debt securities to be of investment grade quality if they are rated BBB or higher by S&P or Baa or higher by Moody's, or if unrated, determined by the Adviser to be of comparable quality. Investment grade debt securities
generally have adequate to strong protection of principal and interest payments. In the lower end of this category, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay
principal than in higher rated categories.
I. Fixed Income Securities. The Fund may invest in all types of fixed income securities, including such securities purchased on a when-issued, delayed delivery, or forward commitment basis. Fixed income securities are
subject to credit risk and interest rate risk. Credit risk is the risk that the Fund could lose money if an issuer of a fixed income security cannot meet its financial obligations or goes bankrupt. Interest rate risk is the risk that the Fund's
investments in fixed income securities may fall when interest rates rise.
Investments in high-yield bonds are considered to be more speculative than higher quality fixed income securities. They are more susceptible to credit risk than investment-grade securities, especially during periods of
economic uncertainty or economic downturns. The value of lower quality securities are subject to greater volatility and are generally more dependent on the ability of the issuer to meet interest and principal payments than higher quality securities.
Issuers of high-yield securities may not be as strong financially as those issuing bonds with higher credit ratings.
J. Financial Services Industry Obligations. The Fund may invest in each of the following obligations of the financial services industry:
(1) Certificates of Deposit. Certificates of deposit are negotiable certificates evidencing the indebtedness of a commercial bank or a savings and loan association to repay funds deposited with it for a definite period
of time (usually from fourteen days to one year) at a stated or variable interest rate.
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(2) Time Deposits. Time deposits are non-negotiable deposits maintained in a banking institution or a savings and loan association for a specified period of time at a stated interest rate.
(3) Bankers' Acceptances. Bankers' acceptances are credit instruments evidencing the obligation of a bank to pay a draft which has been drawn on it by a customer, which instruments reflect the obligation both of the
bank and of the drawer to pay the face amount of the instrument upon maturity.
K. Repurchase Agreements. The Fund may invest in repurchase agreements fully collateralized by obligations issued by the U.S. government or agencies of the U.S. government (“U.S. Government Obligations”). A
repurchase agreement is a short term investment in which the purchaser (i.e., the Fund) acquires ownership of a U.S. Government Obligation (which may be of any maturity) and the seller agrees to repurchase the obligation at a future time at a set
price, thereby determining the yield during the purchaser's holding period (usually not more than 7 days from the date of purchase). Any repurchase transaction in which the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy or other default of the seller, the Fund could experience both delays in liquidating the underlying security and losses in value. However, the Fund intends to enter
into repurchase agreements only with the custodian, other banks with assets of $1 billion or more and registered securities dealers determined by the Adviser to be creditworthy. The Adviser monitors the creditworthiness of the banks and
securities dealers with which the Fund engages in repurchase transactions.
L. Borrowing. The Fund is permitted to borrow money up to one-third of the value of its total assets. Borrowing is a speculative technique that increases both investment opportunity and the Fund's ability to achieve
greater diversification. However, it also increases investment risk. Because the Fund's investments will fluctuate in value, whereas the interest obligations on borrowed funds may be fixed, during times of borrowing, the Fund's net asset value may
tend to increase more when its investments increase in value, and decrease more when its investments decrease in value. In addition, interest costs on borrowings may fluctuate with changing market interest rates and may partially offset or exceed
the return earned on the borrowed funds. Also, during times of borrowing under adverse market conditions, the Fund might have to sell portfolio securities to meet interest or principal payments at a time when fundamental investment considerations
would not favor such sales.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been adopted by the Trust with respect to the Fund and are fundamental (“Fundamental”), i.e, they may not be changed without the affirmative vote of
a majority of the outstanding shares of the Fund. As used in the Prospectus and the Statement of Additional Information, the term “majority” of the outstanding shares of the Fund means the lesser of: (1) 67% or more of the outstanding
shares of the Fund present at a meeting, if the holders of more than 50% of the outstanding shares of the Fund are present or represented at such meeting; or (2) more than 50% of the outstanding shares of the Fund. Other investment practices which
may be changed by the Board of Trustees without the approval of shareholders to the extent permitted by applicable law, regulation or regulatory policy are considered non-fundamental (“Non-Fundamental”).
1. Borrowing Money. The Fund will not borrow money, except: (a) from a bank, provided that immediately after such borrowing there is an asset coverage of 300% for all borrowings of the Fund; or (b) from a bank or other
persons for temporary purposes only, provided that such temporary borrowings are in an amount not exceeding 5% of the Fund's total assets at the time when the borrowing is made. This limitation does not preclude the Fund from entering into reverse
repurchase transactions, provided that the Fund has an asset coverage of 300% for all borrowings and repurchase commitments of the Fund pursuant to reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This limitation is not applicable to activities that may be deemed to involve the issuance or sale of a senior security by the Fund, provided that the
Fund's engagement in such activities is consistent with or permitted by the Investment Company Act of 1940, as amended (the “1940 Act”), the rules and regulations promulgated thereunder or interpretations of the SEC or its staff.
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3. Underwriting. The Fund will not act as underwriter of securities issued by other persons. This limitation is not applicable to the extent that, in connection with the disposition of portfolio securities (including
restricted securities), the Fund may be deemed an underwriter under certain federal securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This limitation is not applicable to investments in marketable securities which are secured by or represent interests in real estate. This limitation does
not preclude the Fund from investing in mortgage-related securities or investing in companies engaged in the real estate business or that have a significant portion of their assets in real estate (including real estate investment trusts).
5. Commodities. The Fund will not purchase or sell commodities unless acquired as a result of ownership of securities or other investments. This limitation does not preclude the Fund from purchasing or selling options
or futures contracts, from investing in securities or other instruments backed by commodities or from investing in companies which are engaged in a commodities business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except: (a) by loaning portfolio securities; (b) by engaging in repurchase agreements; or (c) by purchasing non-publicly offered debt securities. For purposes of
this limitation, the term “loans” shall not include the purchase of a portion of an issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total assets in a particular industry. This limitation is not applicable to investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum limitations on its investment policies and limitations, an excess above the fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or the action taken. This paragraph does not apply to the borrowing policy set forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment company, whether organized as a trust, association or corporation, or a personal holding company, may be merged or consolidated with or acquired by the
Trust, provided that if such merger, consolidation or acquisition results in an investment in the securities of any issuer prohibited by said paragraphs, the Trust shall, within ninety days after the consummation of such merger, consolidation or
acquisition, dispose of all of the securities of such issuer so acquired or such portion thereof as shall bring the total investment therein within the limitations imposed by said paragraphs above as of the date of consummation.
Non-Fundamental. The following limitations have been adopted by the Trust with respect to the Fund and are Non-Fundamental (see “Investment Limitations - Fundamental” above).
1. Pledging. The Fund will not mortgage, pledge, hypothecate or in any manner transfer, as security for indebtedness, any assets of the Fund except as may be necessary in connection with borrowings described in
limitation (1) above. Margin deposits, security interests, liens and collateral arrangements with respect to transactions involving options, futures contracts, short sales and other permitted investments and techniques are not deemed to be a
mortgage, pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. The Fund will not purchase any security while borrowings (including reverse repurchase agreements) representing more than one third of its total assets are outstanding.
3. Margin Purchases. The Fund will not purchase securities or evidences of interest thereon on “margin.” This limitation is not applicable to short term credit obtained by the Fund for the clearance of
purchases and sales or redemption of securities, or to arrangements with respect to transactions involving options, futures contracts, short sales and other permitted investments and techniques.
4. Illiquid Investments. The Fund will not invest more than 15% of its net assets in securities for which there are legal or contractual restrictions on resale and other illiquid securities.
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5. 80% Investment Policy. Under normal circumstances, at least 80% of the Fund’s assets (defined as net assets plus the amount of any borrowing for investment purposes) will be invested in large capitalization companies. The Fund will not change this policy unless the Fund’s shareholders are provided with at least 60 days prior written notice. The notice will be provided in a separate written document, containing the following, or similar, statement, in bold-face type: “Important Notice Regarding Change in Investment Policy.” The statement will also appear on the envelope in which the notice is delivered unless the notice is delivered separate from any other communications to the Fund’s shareholders.
THE INVESTMENT ADVISER
The Adviser is Neiman Funds Management LLC located at 6631 Main Street, Williamsville, New York 14221. As shareholders of the Adviser, Harvey Neiman, Daniel Neiman, Michael Lomas and Glenn Wiggle are regarded to control the Adviser for purposes of the 1940 Act.
Under the terms of the Management Agreement, the Adviser manages the investment portfolio of the Fund, subject to policies adopted by the Trust’s Board of Trustees. Under the Management Agreement, the Adviser, at its own expense and without reimbursement from the Trust, furnishes office space and all necessary office facilities, equipment and executive personnel necessary for managing the assets of the Fund. The Adviser also pays the salaries and fees of all of its officers and employees that serve as officers and trustees of the Trust; the Fund is responsible for the compensation and expenses of any trustees and officers who are not officers or employees of the Adviser. The Adviser receives an annual investment management fee from the Fund of 1.00% of the average daily net assets of the Fund. The Adviser has contractually agreed to waive management fees and reimburse expenses to the extent necessary to maintain total annual operating expenses of the Fund (excluding brokerage fees and commissions, interest and other borrowing expenses, taxes, indirect expenses (such as expenses of other investment companies in which the Fund invests) and extraordinary expenses) at 1.45% of its average daily net assets for No-Load Class and at 1.45% of its average daily net assets for Class A Shares through July 31, 2014. The addition of certain non-waivable and excluded expenses may cause the Fund's total annual fund operating expenses after waivers and reimbursements to exceed the maximum total annual fund operating expenses agreed to by the Adviser. The fee waiver will automatically terminate on July 31, 2014 unless it is renewed by the Adviser. The Adviser may not terminate the fee waiver or expense reimbursement before July 31, 2014. For the fiscal years ended March 31, 2011, 2012, and 2013, the Adviser earned management fees equal to $163,198, $252,860, and $240,444 respectively. For the fiscal years ended March 31, 2011, 2012, and 2013, the Adviser waived management fees equal to $16,048, $27,707, and $46,028 respectively.
The Adviser retains the right to use the name “Neiman Large Cap Value Fund” or any derivative thereof in connection with another investment company or business enterprise with which the Adviser is or may become associated. The Trust's right to use the name “Neiman Large Cap Value Fund” or any derivative thereof automatically ceases ninety days after termination of the Agreement and may be withdrawn by the Adviser on ninety days written notice.
The Adviser may make payments to banks or other financial institutions that provide shareholder services and administer shareholder accounts. If a bank or other financial institution were prohibited from continuing to perform all or a part of such services, management of the Fund believes that there would be no material impact on the Fund or their shareholders. Financial institutions may charge their customers fees for offering these services to the extent permitted by applicable regulatory authorities, and the overall return to those shareholders availing themselves of the financial institution’s services will be lower than to those shareholders who do not. The Fund may from time to time purchase securities issued by financial institutions that provide such services; however, in selecting investments for the Fund, no preference will be shown for such securities.
THE PORTFOLIO MANAGERS
Mr. Harvey Neiman and Mr. Daniel Neiman (the “Portfolio Managers”) are the portfolio managers responsible for the day-to-day management of the Fund. The Portfolio Managers also manage separate accounts for individuals, trusts, corporations, partnerships and retirement plans. The following provides information regarding other accounts managed by the Portfolio Managers as of March 31, 2013:
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Harvey Neiman
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Total Assets By
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|
Number of Accounts
|
Account Type
|
|
|
Number of Accounts
|
Total Assets By
|
by Type Subject to a
|
Subject to a
|
|
Account Type
|
by Account Type
|
Account Type
|
Performance Fee
|
Performance Fee
|
|
Registered
|
1
|
$16.2 Million
|
0
|
0
|
|
Investment
|
|
|
|
|
|
Companies
|
|
|
|
|
|
Other Pooled
|
0
|
0
|
0
|
0
|
|
Investment Vehicles
|
|
|
|
|
|
Other Accounts
|
915
|
$117.8 Million
|
0
|
0
|
Daniel Neiman
|
|
|
|
|
Total Assets By
|
|
|
|
|
Number of Accounts
|
Account Type
|
|
|
Number of Accounts
|
Total Assets By
|
by Type Subject to a
|
Subject to a
|
|
Account Type
|
by Account Type
|
Account Type
|
Performance Fee
|
Performance Fee
|
|
Registered
|
1
|
$16.2 Million
|
0
|
0
|
|
Investment
|
|
|
|
|
|
Companies
|
|
|
|
|
|
Other Pooled
|
0
|
0
|
0
|
0
|
|
Investment Vehicles
|
|
|
|
|
|
Other Accounts
|
951
|
$124 Million
|
0
|
0
|
The Adviser offers several wealth management models in which its private client group (separately managed accounts) participates. These offerings include portfolios of investments substantially identical to the Fund, which could create certain conflicts of interest. Actual or apparent conflicts of interest may arise in connection with the day-to-day management of the Fund and other accounts. The management of the Fund and other accounts may result in unequal time and attention being devoted to the Fund and other accounts. Another potential conflict of interest may arise where another account has the same investment objective as the Fund, whereby the portfolio manager could favor one account over another. Further, a potential conflict could include the portfolio manager’s knowledge about the size, timing and possible market impact of Fund trades, whereby the portfolio manager could use this information to the advantage of other accounts and to the disadvantage of the Fund. These potential conflicts of interest could create the appearance that the portfolio manager is favoring one investment vehicle over another.
As the Fund and any separate accounts managed similarly to the Fund will be managed concurrently, all portfolio transactions are implemented according the Adviser’s trade allocation procedures and side-by-side policies. The Adviser believes that these procedures, among other things, ensure that all trades allocated to advisory clients (including the Fund) fulfill the Adviser’s fiduciary duty to each client and otherwise allocates securities on a basis that is fair and nondiscriminatory. Such procedures are generally applied in numerous instances, including, among other things, blocked and bunched trades. In determining a fair allocation, the Adviser takes into account a number of factors, including, among other things, the Adviser’s fiduciary duty to each client, any potential conflicts of interest, the size of the transaction, the relative size of a client’s portfolio, cash available for investment suitability, as well as each client’s investment objectives.
Mr. Harvey Neiman and Mr. Daniel Neiman are not paid a salary. Mr. Harvey Neiman and Mr. Daniel Neiman own the majority of outstanding shares of the Adviser. Mr. Harvey Neiman and Mr. Daniel Neiman participate directly in all profits and losses of the Adviser, including the advisory fees paid by the Funds. There are no bonuses, deferred compensation or retirement plans associated with his service to the Funds.
8
The following table shows the dollar range of equity securities beneficially owned by the Portfolio Managers in the Fund as of March 31, 2013.
|
Name of Portfolio Manager
|
|
Dollar Range of Equity Securities in
|
|
|
|
the Fund
|
|
Mr. Harvey Neiman
|
|
$10,001-$50,000
|
|
Mr. Daniel Neiman
|
|
$10,001-$50,000
|
TRUSTEES AND OFFICERS
The Board of Trustees supervises the business activities of the Trust. Each Trustee serves as a trustee until the termination of the Trust, unless the Trustee dies, resigns, retires or is removed. The Board has engaged the Adviser to manage and/or administer the Trust and is responsible for overseeing the Adviser and other service providers to the Trust and the Fund. The Board is currently composed of five Trustees, including three Trustees who are not “interested persons” of the Fund, as that term is defined in the 1940 Act (each an “Independent Trustee”). In addition to four regularly scheduled meetings per year, the Board holds special meetings or informal conference calls to discuss specific matters that may require action prior to the next regular meeting. The Board of Trustees has established an Audit Committee comprised entirely of Trustees who are Independent Trustees. The Audit Committee is generally responsible for (i) overseeing and monitoring the Trust's internal accounting and control structure, its auditing function and its financial reporting process, (ii) selecting and recommending to the full Board of Trustees the appointment of auditors for the Trust, (iii) reviewing audit plans, fees, and other material arrangements with respect to the engagement of auditors, including permissible non-audit services performed; (iv) reviewing the qualifications of the auditor's key personnel involved in the foregoing activities and (v) monitoring the auditor's independence.
The Chairman of the Board of Trustees is Mr. Harvey Neiman, who is an “interested person” of the Trust, within the meaning of the 1940 Act, on the basis of his affiliation with the Funds and the Adviser. The Trust does not have a “lead” independent trustee. The use of an interested Chairman balanced by an independent Audit Committee allows the Board to access the expertise necessary of oversee the Trust, identify risks, recognize shareholder concerns and needs and highlight opportunities. The Audit Committee is able to focus Board time and attention to matters of interest to shareholders and, through its private sessions with the Trust’s auditor, Chief Compliance Officer and legal counsel, stay fully informed regarding management decisions. Considering the size of the Trust and its shareholder base, the Trustees have determined that an interested Chairman balanced by an independent Audit Committee Lead Independent Trustee is the appropriate leadership structure for the Board of Trustees
Mutual funds face a number of risks, including investment risk, compliance risk and valuation risk. The Board oversees management of the Fund’s risks directly and through its officers. While day-to-day risk management responsibilities rest with the Fund’s Chief Compliance Officer, investment adviser and other service providers, the Board monitors and tracks risk by: (1) receiving and reviewing quarterly reports related to the performance and operations of the Funds; (2) reviewing and approving, as applicable, the compliance policies and procedures of the Trust, including the Trust’s valuation policies and transaction procedures; (3) periodically meeting with the portfolio management team to review investment strategies, techniques and related risks; (4) meeting with representatives of key service providers, including the Fund’s investment adviser, administrator, transfer agent, the custodian and the independent registered public accounting firm, to discuss the activities of the Fund; (5) engaging the services of the Chief Compliance Officer of the Fund to test the compliance procedures of the Trust and its service providers; (6) receiving and reviewing reports from the Trust’s independent registered public accounting firm regarding the Funds’ financial condition and the Trust’s internal controls; and (7) receiving and reviewing an annual written report prepared by the Chief Compliance Officer reviewing the adequacy of the Trust’s compliance policies and procedures and the effectiveness of their implementation. The Board has concluded that its general oversight of the investment adviser and other service providers as implemented through the reporting and monitoring process outlined above allows the Board to effectively administer its risk oversight function.
9
Each Trustee was nominated to serve on the Board of Trustees based on their particular experiences, qualifications, attributes and skills. The characteristics that have led the Board to conclude that each of the Trustees should continue to serve as
a Trustee of the Trust are discussed below.
Harvey Neiman
. Mr. Neiman has served as a Chairman of the Board of Trustees since the Trust’s inception in 2003. Mr. Neiman is President of Neiman Funds Management LLC, the Fund’s investment adviser, and has worked in the
investment management industry since 1993. Mr. Neiman brings operational, investment management and marketing knowledge to the Board of Trustees.
Michael Lomas.
Mr. Lomas has worked in the investment management industry since 1997 as, among other things, the founder and president of an investment advisory firm and the registered representative of a broker-dealer. Like Mr.
Neiman, Mr. Lomas brings operational and investment management knowledge to the Board of Trustees, as well as marketing, strategic planning and budgeting skills.
Darla Clark
. Ms. Clark has served as a Trustee since the Trust’s inception in 2003. Ms. Clark’s business and banking background provides the Audit Committee with the skills to analyze financial reports and the Board with the
knowledge and expertise to determine the strategic direction of the Fund.
Suzanne Cowan Dimeff.
Ms. Dimeff has served as a Trustee since the Trust’s inception in 2003. Ms. Dimeff is an attorney with a litigation practice. Her strategic planning, organizational and leadership skills help the Board and
Audit Committee set long-term goals for the Fund and establish processes for overseeing Trust policies and procedures.
Luke Fairfield.
Mr. Fairfield has served as a Trustee since the Trust’s inception in 2003. As a Chief Financial Officer and Certified Public Accountant, Mr. Fairfield brings budgeting and financial reporting skills to the Board of
Trustees and the Audit Committee. Mr. Fairfield serves as Chairman of the Trust’s Audit Committee.
10
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.
Interested Trustees and Officers
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
Directorships
|
|
Name,
|
Position
|
Term of Office
|
|
Principal Occupation(s)
|
Number of
|
Held By
|
|
Address
(1)
,
|
with
|
and
|
|
During Past
|
Portfolios
|
Trustee During
|
|
and Age
|
the Trust
|
Length of
|
|
5 Years
|
Overseen
|
Past
|
|
|
|
Time Served
|
|
|
By Trustee
|
5 Years
|
|
|
|
Harvey
|
President
|
Indefinite Term
|
|
Neiman Capital Management LLC,
|
3
|
None
|
|
Neiman
(2)
,
|
and Trustee
|
Since 2003
|
|
Portfolio Manager (1999 – 2009).
|
|
|
|
Year of
|
|
|
|
Neiman Funds Management LLC,
|
|
|
|
birth: 1943
|
|
|
|
Portfolio Manager (2009-Present).
|
|
|
|
|
|
|
|
Independent Solutions Wealth
|
|
|
|
|
|
|
|
Management, LLC, Chief
|
|
|
|
|
|
|
|
Investment Officer (2012-Present).
|
|
|
|
|
|
Michael
|
Trustee
|
Indefinite Term
|
|
NEXT Financial Group, Division
|
3
|
None
|
|
Lomas
(2)
|
|
Since 2009
|
|
Manager and Registered
|
|
|
|
Year of
|
|
|
|
Representative (2000-Present);
|
|
|
|
Birth: 1974
|
|
|
|
Financials Guys LLC, Co-
|
|
|
|
|
|
|
|
owner/Co-founder (2000-Present);
|
|
|
|
|
|
|
|
Independent Solutions Wealth
|
|
|
|
|
|
|
|
Management, LLC, President
|
|
|
|
|
|
|
|
(2007-Present). Neiman Funds
|
|
|
|
|
|
|
|
Management LLC, Business
|
|
|
|
|
|
|
|
Development (2009-Present).
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
|
Treasurer,
|
Indefinite Term
|
|
Neiman Capital Management LLC,
|
NA
|
NA
|
|
Neiman
(2)
,
|
Secretary,
|
Since 2003
|
|
Portfolio Manager (1999 – 2009).
|
|
|
|
Year of
|
and Chief
|
(Chief
|
|
Neiman Funds Management LLC,
|
|
|
|
birth: 1977
|
Compliance
|
Compliance
|
|
Portfolio Manager (2009-Present).
|
|
|
|
|
Officer
|
Officer Since
|
|
Independent Solutions Wealth
|
|
|
|
|
|
2004)
|
|
Management, LLC, Chief
|
|
|
|
|
|
|
|
Financial Officer and Portfolio
|
|
|
|
|
|
|
|
Manger (2012-Present).
|
|
|
(1)
The address of each trustees and officer is c/o Neiman Funds, 6631 Main Street, Williamsville, NY 14221.
(2)
Harvey Neiman, Michael Lomas, and Daniel Neiman are considered to be “interested persons” as defined in
Section 2(a)(19) of the Investment Company Act of 1940 by virtue of their affiliation with the Adviser. Harvey
Neiman is Daniel Neiman’s father.
|
11
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.
Independent Trustees
|
Name,
|
Position
|
Term of Office
|
Principal Occupation(s)
|
Number of
|
Other
|
|
Address
(3)
,
|
with
|
and
|
During Past
|
Portfolios
|
Directorships
|
|
and Age
|
the Trust
|
Length of
|
5 Years
|
Overseen
|
Held By
|
|
|
|
Time Served
|
|
By Trustee
|
Trustee During
|
|
|
|
|
|
|
Past 5 Years
|
|
|
|
Darla
|
Independent
|
Indefinite Term
|
Bank Officer, Senior Vice
|
3
|
None
|
|
Clark, Year
|
Trustee
|
Since 2003
|
President of Regents Bank (2001-
|
|
|
|
of Birth:
|
|
|
Present).
|
|
|
|
1950
|
|
|
|
|
|
|
|
|
Suzanne
|
Independent
|
Indefinite Term
|
Attorney at Dimeff Law Offices,
|
3
|
None
|
|
Cowan
|
Trustee
|
Since 2003
|
Tax & Estate Planning Attorney
|
|
|
|
Dimeff,
|
|
|
(2000-Present).
|
|
|
|
Year of
|
|
|
|
|
|
|
Birth: 1953
|
|
|
|
|
|
|
|
|
Luke
|
Independent
|
Indefinite Term
|
Partner / FPS, CPAs, Certified
|
3
|
None
|
|
Fairfield,
|
Trustee
|
Since 2003
|
Public Accountant (2007-Present).
|
|
|
|
Year of
|
|
|
Chief Financial Officer/ Controller
|
|
|
|
Birth: 1976
|
|
|
at Southwest Greens, a
|
|
|
|
|
|
|
Construction Co. (2002-2010).
|
|
|
|
(3)
The address of each trustee is c/o Neiman Funds, 6631 Main Street, Williamsville, NY 14221.
|
BOARD INTEREST IN THE FUND
As of December 31, 2012, the Trustees owned the following amounts in the Fund:
|
|
|
|
|
Aggregate Dollar Range of Equity
|
|
Name of Trustee or Officer
|
|
Dollar Range of Securities In The
|
|
Securities In All Registered Investment
|
|
|
|
Neiman Large Cap Value Fund
|
|
Companies Overseen By Trustee In
|
|
|
|
|
|
Family of Investment Companies
(1)
|
|
Harvey Neiman
|
|
$10,001-$50,000
|
|
$50,001-$100,000
|
|
Michael Lomas
|
|
$10,001-$50,000
|
|
over $100,000
|
|
Daniel Neiman
|
|
$10,001-$50,000
|
|
$10,001-$50,000
|
|
Darla Clark
|
|
$0
|
|
$0
|
|
Suzanne Cowan Dimeff
|
|
$0
|
|
$0
|
|
Luke Fairfield
|
|
$0
|
|
$0
|
|
|
(1)
The “Family of Investment Companies” and “Fund Complex” includes the Neiman Large Cap Value Fund,
Neiman Balanced Allocation Fund and the Neiman Tactical Income Fund.
|
12
COMPENSATION
Trustee fees are Trust expenses and each series of the Trust pays a portion of the Trustee fees. Officers and Trustees of the Fund who are deemed “interested persons” of the Trust receive no compensation from the Fund. The following table provides information regarding Trustee compensation for the fiscal year ended March 31, 2013.
|
Name
|
|
Aggregate Compensation from the
|
|
Total Compensation from the
|
|
|
|
Neiman Large Cap Value Fund
|
|
Fund Complex
(1)
|
|
Harvey Neiman
|
|
$0
|
|
$0
|
|
Michael Lomas
|
|
$0
|
|
$0
|
|
Darla Clark
|
|
$1,000
|
|
$2,750
|
|
Suzanne Cowan Dimeff
|
|
$1,000
|
|
$2,750
|
|
Luke Fairfield
|
|
$1,000
|
|
$2,750
|
(1)
The “Family of Investment Companies” and “Fund Complex” includes the Neiman Large Cap Value Fund,
Neiman Balanced Allocation Fund and the Neiman Tactical Income Fund.
|
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
A principal shareholder is any person who owns (either of record or beneficially) 5% or more of the outstanding shares of the Fund. A control person is one who owns, either directly or indirectly, more than 25% of the voting securities of a company or acknowledges the existence of such control. A controlling shareholder could control the outcome of any proposal submitted to the shareholders for approval, including changes to the Fund’s fundamental policies or the terms of the management agreement with the Adviser. As of July 15, 2013, each of the following shareholders was considered to be either a control person or principal shareholder of the Neiman Large Cap Value Fund:
NO-LOAD SHARES
|
Name and Address
|
Shares
|
Percent Ownership
|
|
Type of Ownership
|
|
National Financial Services
|
578,460.15
|
56.63%
|
|
Record
|
|
For Benefit of Customers
|
|
|
|
|
|
One World Financial Center
|
|
|
|
|
|
200 Liberty Street, 5
th
Floor
|
|
|
|
|
|
New York, New York 10281-1003
|
|
|
|
|
|
Pershing LLC
|
153,729.24
|
15.05%
|
|
Record
|
|
One Pershing Plaza
|
|
|
|
|
|
Jersey City, NJ 07399
|
|
|
|
|
|
Neiman Balanced Allocation Fund
|
103,095.53
|
10.09%
|
|
Record
|
|
6631 Main Street, Williamsville, New
|
|
|
|
|
|
York, 14221
|
|
|
|
|
|
Charles Schwab & Co., Inc.
|
87,073.13
|
8.52%
|
|
Record
|
|
For Benefit of Customers
|
|
|
|
|
|
101 Montgomery Street
|
|
|
|
|
|
San Francisco, CA 94104
|
|
|
|
|
As of July 15, 2013, the trustees and officers as a group owned less than 1.00% of the outstanding shares of the Fund.
CLASS A SHARES
|
Name and Address
|
Shares
|
Percent Ownership
|
|
Type of Ownership
|
|
Pershing LLC
|
12,103.08
|
81.06%
|
|
Record
|
|
One Pershing Plaza
|
|
|
|
|
|
Jersey City, NJ 07399
|
|
|
|
|
13
As of July 15, 2013, the trustees and officers as a group owned 1.54% of the outstanding shares of the Fund.
AUDIT COMMITTEE
The Board of Trustees has an Audit Committee, which is comprised of the independent members of the Board of Trustees, Darla Clark, Suzanne Cowan Dimeff and Luke Fairfield. The Audit Committee oversees and monitors the Trust’s internal accounting and control structure, its auditing function and financial reporting process. The Audit Committee selects and recommends to the full Board of Trustees the appointment of auditors for the Trust. The Audit Committee also reviews audit plans, fees, and other material arrangements with respect to the engagement of auditors, including permissible non-audit services performed. It reviews the qualifications of the auditor’s key personnel involved in the foregoing activities and monitors the auditor’s independence. During the fiscal year ended March 31, 2013, the Audit Committee met three times.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees, the Adviser is responsible for the Fund's portfolio decisions and the placing of the Fund's portfolio transactions. In placing portfolio transactions, the Adviser seeks the best qualitative execution for the Fund, taking into account such factors as price (including the applicable brokerage commission or dealer spread), the execution capability, financial responsibility and responsiveness of the broker or dealer and the brokerage and research services provided by the broker or dealer. The Adviser generally seeks favorable prices and commission rates that are reasonable in relation to the benefits received. The Adviser may not give consideration to sales of shares of the Trust as a factor in the selection of brokers and dealers to execute portfolio transactions. However, the Adviser may place portfolio transactions with brokers or dealers that promote or sell the Fund’s shares so long as such placements are made pursuant to policies approved by the Fund’s Board of Trustees that are designed to ensure that the selection is based on the quality of the broker’s execution and not on its sales efforts. For the fiscal year ended March 31, 2011, the Fund paid brokerage commissions of $4,732. For the fiscal year ended March 31, 2012, the Fund paid brokerage commissions of $8,895. For the fiscal year ended March 31, 2013, the Fund paid brokerage commissions of $6,210.
The Adviser is specifically authorized to select brokers or dealers who also provide brokerage and research services to the Fund and/or the other accounts over which the Adviser exercises investment discretion and to pay such brokers or dealers a commission in excess of the commission another broker or dealer would charge if the Adviser determines in good faith that the commission is reasonable in relation to the value of the brokerage and research services provided. The determination may be viewed in terms of a particular transaction or the Adviser's overall responsibilities with respect to the Trust and to other accounts over which it exercises investment discretion.
Research services include supplemental research, securities and economic analyses, statistical services and information with respect to the availability of securities or purchasers or sellers of securities and analyses of reports concerning performance of accounts. The research services and other information furnished by brokers through whom the Fund effect securities transactions may also be used by the Adviser in servicing all of its accounts. Similarly, research and information provided by brokers or dealers serving other clients may be useful to the Adviser in connection with its services to the Fund. Although research services and other information are useful to the Fund and the Adviser, it is not possible to place a dollar value on the research and other information received. It is the opinion of the Board of Trustees and the Adviser that the review and study of the research and other information will not reduce the overall cost to the Adviser of performing its duties to the Fund under the Agreement. Due to research services provided by brokers, the Fund may direct trades to certain brokers.
Over-the-counter transactions will be placed either directly with principal market makers or with broker-dealers, if the same or a better price, including commissions and executions, is available. Fixed income securities are normally purchased directly from the issuer, an underwriter or a market maker. Purchases include a concession paid by the issuer to the underwriter and the purchase price paid to a market maker may include the spread between the bid and asked prices.
When the Fund and another of the Adviser's clients seek to purchase or sell the same security at or about the same time, the Adviser may execute the transaction on a combined (“blocked”) basis. Blocked transactions can
14
produce better execution for the Fund because of the increased volume of the transaction. If the entire blocked order is not filled, the Fund may not be able to acquire as large a position in such security as it desires or it may have to pay a higher price for the security. Similarly, the Fund may not be able to obtain as large an execution of an order to sell or as high a price for any particular portfolio security if the other client desires to sell the same portfolio security at the same time. In the event that the entire blocked order is not filled, the purchase or sale will normally be allocated on a pro rata basis. The allocation may be adjusted by the Adviser, taking into account such factors as the size of the individual orders and transaction costs, when the Adviser believes an adjustment is reasonable.
The Trust and the Adviser have each adopted a Code of Ethics (the “Code”) under Rule 17j-1 of the Investment Company Act of 1940. The personnel subject to the Code are permitted to invest in securities, including securities that may be purchased or held by the Fund. You may obtain a copy of the Code from the SEC.
ADDITIONAL TAX INFORMATION
The following discussion of certain U.S. federal income tax consequences is general in nature and should not be regarded as an exhaustive presentation of all possible tax ramifications. Each shareholder should consult a qualified tax advisor regarding the tax consequences of an investment in the Fund. The tax considerations relevant to a specific shareholder depend upon the shareholder’s specific circumstances, and the following general summary does not attempt to discuss all potential tax considerations that could be relevant to a prospective shareholder with respect to the Fund or its investments. This general summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), the U.S. federal income tax regulations promulgated thereunder, and administrative and judicial interpretations thereof as of the date hereof, all of which are subject to change (potentially on a retroactive basis).
The Fund intends to qualify each year as a regulated investment company under Subchapter M of the Code, which requires compliance with certain requirements concerning the sources of its income, diversification of its assets, and the amount and timing of its distributions to shareholders. Such qualification does not involve supervision of management or investment practices or policies by any government agency or bureau. By so qualifying, the Fund should not be subject to federal income or excise tax on its net investment income or net realized capital gain, which are distributed to shareholders in accordance with the applicable timing requirements.
The Fund intends to distribute substantially all of its net investment income (including any excess of net short-term capital gains over net long-term capital losses) and net realized capital gain (that is, any excess of net long-term capital gains over net short-term capital losses) in accordance with the timing requirements imposed by the Code and therefore should not be required to pay any federal income or excise taxes. Net realized capital gain for a fiscal year is computed by taking into account any capital loss carryforward of the Fund.
To be treated as a regulated investment company under Subchapter M of the Code, the Fund must also (a) derive at least 90% of its gross income from dividends, interest, payments with respect to securities loans, net income from certain publicly traded partnerships and gains from the sale or other disposition of securities or foreign currencies, or other income (including, but not limited to, gains from options, futures or forward contracts) derived with respect to the business of investing in such securities or currencies, and (b) diversify its holding so that, at the end of each fiscal quarter, (i) at least 50% of the market value of the Fund’s assets is represented by cash, U.S. government securities and securities of other regulated investment companies, and other securities (for purposes of this calculation, generally limited in respect of any one issuer, to an amount not greater than 5% of the market value of the Fund’s assets and 10% of the outstanding voting securities of such issuer) and (ii) not more than 25% of the value of its assets is invested in the securities (other than U.S. government securities or the securities of other regulated investment companies) of any one issuer, two or more issuers which the Fund controls and which are determined to be engaged in the same or similar trades or businesses, or the securities of certain publicly traded partnerships.
If the Fund fails to qualify as a regulated investment company under Subchapter M in any fiscal year, it may be treated as a corporation for federal income tax purposes. As such, the Fund would be required to pay income taxes on its net investment income and net realized capital gains, if any, at the rates generally applicable to corporations. Shareholders of the Fund generally would not be liable for income tax on the Fund’s net investment income or net realized capital gains in their individual capacities. However, distributions to shareholders, whether
15
from the Fund’s net investment income or net realized capital gains, would be treated as taxable dividends to the extent of current or accumulated earnings and profits of the Fund.
As a regulated investment company, the Fund is subject to a 4% nondeductible excise tax on certain undistributed amounts of ordinary income and net realized capital gain under a prescribed formula contained in Section 4982 of the Code. The formula requires payment to shareholders during a calendar year of distributions representing at least 98% of the Fund’s ordinary income for the calendar year and at least 98.2% of its net realized capital gain (i.e., the excess of its capital gains over capital losses) realized during the one-year period ending October 31 during such year plus 100% of any income that was neither distributed nor taxed to the Fund during the preceding calendar year. Under ordinary circumstances, the Fund expects to time its distributions so as to avoid liability for this tax.
The following discussion of U.S. federal income tax consequences is for the general information of shareholders that are subject to tax. Shareholders that are invested in IRAs or other qualified retirement plans are exempt from income taxation under the Code.
Distributions of taxable net investment income (including the excess of net short-term capital gain over net long-term realized capital loss) generally are taxable to shareholders as ordinary income. However, distributions by the Fund to a non-corporate shareholder may be subject to income tax at the shareholder’s applicable tax rate for long-term capital gain, to the extent that the Fund receives qualified dividend income on the securities it holds, the Fund properly designates the distribution as qualified dividend income, and the Fund and the non-corporate shareholder receiving the distribution meets certain holding period and other requirements. Distributions of net realized capital gain (“capital gain dividends”) generally are taxable to shareholders as long-term capital gain, regardless of the length of time the shares of the Trust have been held by such shareholders. Under current law, capital gain dividends recognized by a non-corporate shareholder generally will be taxed at a maximum income tax rate of 20%. Capital gains of corporate shareholders are taxed at the same rate as ordinary income.
Distributions of taxable net investment income and net realized capital gain will be taxable as described above, whether received in additional cash or shares. All distributions of taxable net investment income and net realized capital gain, whether received in shares or in cash, must be reported by each taxable shareholder on his or her federal income tax return. Dividends or distributions declared in October, November or December as of a record date in such a month, if any, will be deemed to have been received by shareholders on December 31, if paid during January of the following year. Redemptions of shares may result in tax consequences (gain or loss) to the shareholder and are also subject to these reporting requirements.
Redemption of Fund shares by a shareholder will result in the recognition of taxable gain or loss in an amount equal to the difference between the amount realized and the shareholder’s tax basis in the shareholder's Fund shares. Such gain or loss is treated as a capital gain or loss if the shares are held as capital assets. However, any loss realized upon the redemption of shares within six months from the date of their purchase will be treated as a long-term capital loss to the extent of any amounts treated as capital gain dividends during such six-month period. All or a portion of any loss realized upon the redemption of shares may be disallowed to the extent shares are purchased (including shares acquired by means of reinvested dividends) within 30 days before or after such redemption.
Under the Code, the Fund will be required to report to the Internal Revenue Service all distributions of taxable income and net realized capital gains as well as gross proceeds from the redemption or exchange of Fund shares, except in the case of certain exempt shareholders. Under the backup withholding provisions of Section 3406 of the Code, distributions of taxable net investment income and net realized capital gain and proceeds from the redemption or exchange of the shares of a regulated investment company may be subject to withholding of federal income tax (currently, at a rate of 28%) in the case of non-exempt shareholders who fail to furnish the investment company with their taxpayer identification numbers and with required certifications regarding their status under the federal income tax law, or if the Fund is notified by the IRS or a broker that withholding is required due to an incorrect TIN or a previous failure to report taxable interest or dividends. If the withholding provisions are applicable, any such distributions and proceeds, whether taken in cash or reinvested in additional shares, will be reduced by the amounts required to be withheld.
16
For taxable years beginning after December 31, 2012, an additional 3.8% Medicare tax generally will be imposed on certain net investment income (including ordinary dividends and capital gain distributions received from the Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that any such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust) exceeds certain threshold amounts.
Shareholders should consult their tax advisers about the application of federal, state, local and foreign tax law in light of their particular situation.
Should additional series, or funds, be created by the Trustees, each fund would be treated as a separate tax entity for federal income tax purposes.
PRICING OF FUND SHARES
The price (net asset value) of the shares of the Fund is normally determined as of 4:00 p.m., Eastern time on each day the Trust is open for business and on any other day on which there is sufficient trading in the Fund's securities to materially affect the net asset value. The Trust is normally open for business on every day except Saturdays, Sundays and the following holidays: New Year's Day, Martin Luther King Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
Securities that are traded on any exchange or on the NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking a last sale price, a long security is valued at its last bid price except when, in the Adviser's opinion, the last bid price does not accurately reflect the current value of the long security. All other long securities for which over-the-counter market quotations are readily available are valued at their last bid price. Lacking a last sale price, a short position is valued at its last ask price except when, in the Adviser’s opinion, the last ask price does not accurately reflect the current value of the short position. All other short positions for which over-the-counter market quotations are available are valued at their last ask price. When market quotations are not readily available, when the Adviser determines the last bid or ask price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review of the Board of Trustees.
Fixed income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices accurately reflect the fair market value of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. If the Adviser 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 Adviser, 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.
SHARES OF THE FUND
The Fund offers No-Load Shares and Class A Shares. Each class of shares represents an interest in the same portfolio of investments of the Fund and have the same rights, except that Class A Shares has exclusive voting rights with respect to its Rule 12b-1 distribution plan. The net asset value per share of each of the classes is expected to differ from time to time.
Class A Shares
The public offering price for Class A shares of the Fund is the next determined NAV plus a sales charge, as shown on the following table.
17
|
|
Sales Charge as a % of
|
|
|
|
|
|
|
|
|
|
Financial
|
|
|
|
Public Offering
|
|
Net Amount
|
|
Intermediary
|
|
|
Amount of Investment
|
Price
|
|
Invested
|
|
Commission
1
|
|
|
Less than $50,000
|
5.75%
|
|
6.10%
|
|
5.00%
|
|
|
$50,000 but less than $100,000
|
4.50%
|
|
4.71%
|
|
3.75%
|
|
|
$100,000 but less than $250,000
|
3.75%
|
|
3.90%
|
|
3.00%
|
|
|
$250,000 but less than $500,000
|
3.00%
|
|
3.09%
|
|
2.50%
|
|
|
$500,000 but less than $1,000,000
|
2.00%
|
|
2.04%
|
|
1.50%
|
|
|
$1,000,000 or more
|
None
|
|
None
|
|
None
|
|
|
1
As a percentage of the public offering price.
|
|
|
|
|
|
|
The Fund permits you to reduce the initial sales charge you pay on Class A shares by using the Right of Accumulation or a Letter of Intent. Each of these methods for reducing the initial sales charge on Class A shares is described below. In taking advantage of these methods for reducing the initial sales charge you will pay, you may link your purchases of shares with purchases of shares in accounts owned by your spouse or children under the age of 21 who share your residential address. It is your responsibility when investing to inform your financial intermediary or the Fund that you would like to have one or more accounts linked together for purposes of reducing the initial sales charge.
Right of Accumulation:
You may qualify for a reduction in the initial sales charge for future purchases of Class A shares based on the current market value of your Class A holdings from prior purchases through the Right of Accumulation. To calculate the sales charge applicable to your net purchase of Class A shares, you may aggregate your investment with the current market value of any Class A shares of the Fund held in:
|
1.
|
Your account(s);
|
|
|
|
2.
|
Your spouse’s account(s);
|
|
|
|
3.
|
Joint accounts with qualified spouse;
|
|
|
|
4.
|
Account(s) of children under the age of 21 who share your residential address;
|
|
|
|
5.
|
Trust accounts established by any of the individuals in items (1) through (3) above. If the person(s) who established the trust is deceased, the trust account may be aggregated with the account(s) of the primary beneficiary of the trust;
|
|
|
|
6.
|
Solely controlled business accounts; and
|
|
|
|
7.
|
Single-participant retirement plans of any of the individuals in items (1) through (3) above.
|
|
|
In order to obtain any reduction in the initial sales charge, you must, before purchasing Class A shares, inform the Fund or your financial intermediary if you have any of the above types of accounts that can be aggregated with your current investment in Class A shares to reduce the applicable sales charge. In order to verify your eligibility for a reduced sales charge, you may be required to provide appropriate documentation, such as an account statement or the social security or tax identification number on an account, so that the Fund may verify (1) the number of shares of the Fund held in your account(s) with the Fund, (2) the number of shares of the Fund held in your account(s) with a financial intermediary , and (3) the number of shares of the Fund held in an account with a financial intermediary owned by your spouse or by children under the age of 21 who share your residential address.
18
Letter of Intent:
You may purchase Class A shares at the sales charge rate applicable to the total amount of the purchases you intend to make over a 13-month period. The Fund will combine the value of your current purchases with the current value of any Class A shares you purchased previously for (i) your account, (ii) your spouse’s account, (iii) a joint account with your spouse, or (iv) your minor children’s trust or custodial accounts. In calculating the total amount of purchases, you may include in your letter purchases made up to 90 days before the date of the Letter of Intent. A fiduciary purchasing shares for the same fiduciary account, trust or estate may also consider the value of Class A shares purchased previously that were sold subject to a sales charge. In other words, a Letter of Intent allows you to purchase Class A shares of the Fund over a 13-month period and receive the same sales charge as if you had purchased all the shares at the same time. The Fund will also consider the value of Class A shares sold at NAV. Class A shares purchased with dividends or distributions will not be included in the calculation. To be entitled to a reduced sales charge on the purchase of Class A shares based on shares you intend to purchase over the 13-month period, you must send the Fund a Letter of Intent. The 13-month period begins on the date of the first purchase, including those purchases made in the 90-day period before the date of the Letter of Intent. Please note that the purchase price of these prior purchases will not be adjusted.
You are not legally bound by the terms of your Letter of Intent to purchase the amount of shares stated in the Letter of Intent. The Letter of Intent does, however, authorize the Fund to hold in escrow 5.00% of the total amount you intend to purchase. If you do not complete the total intended purchase of Class A shares at the end of the 13-month period, the Fund’s transfer agent will redeem the necessary portion of the escrowed shares to make up the difference between the reduced sales charge rate (based on the amount you intended to purchase) and the sales charge rate that would normally apply (based on the actual amount you purchased).
Sales Charge Waivers
Sales charges may be waived for the following:
No sales charge is imposed on Class A shares of the Fund if the shares were:
|
1.
|
Bought by officers, directors or trustees, and employees and their immediate family members (i.e., spouses, children, grandchildren, parents, grandparents and any dependent of the person, as defined in section 152 of the Internal Revenue Code) of:
|
|
|
|
|
|
Neiman Funds;
|
|
|
|
|
|
Neiman Funds Management LLC and its subsidiaries and affiliates;
|
|
|
|
|
|
The Distributor and its subsidiaries and affiliates; or
|
|
|
|
|
|
Broker-dealers or financial institutions that have entered into dealer agreements with the Funds or their principal underwriter and their subsidiaries and affiliates (or otherwise have an arrangement with a broker-dealer or financial institution with respect to sales of Fund shares).
|
|
|
|
2.
|
Bought by advisory clients of Neiman Funds Management LLC and its subsidiaries and affiliates.
|
|
|
|
3.
|
Bought by certain retirement and deferred compensation plans, and trusts used to fund those plans, including, but not limited to, those plans qualified under sections 401(k), 403(b) or 457 of the Internal Revenue Code and “rabbi trusts.”
|
|
|
|
4.
|
Bought by Financial Intermediaries who have a dealer arrangement with the Distributor, who place trades for their own accounts or for the accounts of their clients and who charge a management, asset allocation, consulting or other fee for their services, or clients of such Financial Intermediaries who place trades for their own accounts if the accounts are linked to the master account of such financial intermediary .
|
|
|
|
5.
|
Bought by an investment adviser, broker-dealer or financial planner, provided arrangements are pre- approved.
|
|
|
19
|
6.
|
Bought by a bank, trust company or thrift institution which is acting as a fiduciary exercising investment discretion, provided that appropriate notification of such a fiduciary relationship is reported at the time of the investment to the Fund or the Fund’s Distributor.
|
|
|
|
7.
|
Bought by employer-sponsored health savings accounts.
|
|
|
|
8.
|
Bought with proceeds from the sale of Class A shares of the Fund, but only if the purchase is made within 90 days of the sale or distribution. Appropriate documentation may be required. Exercising the reinvestment privilege will not affect the character of any gain or loss realized on the redemption for federal income tax purposes, except that if the redemptions resulted in a loss, the reinvestment may result in the loss being disallowed under the “wash sale” rules.
|
|
|
|
9.
|
Bought in connection with plans of reorganizations of the Fund, such as mergers, asset acquisitions and exchange offers to which the Fund is a party.
|
|
|
|
10.
|
Bought by a “charitable organization” as defined for purposes of Section 501(c)(3) of the Internal Revenue Code, or by a charitable remainder trust or life income pool established for the benefit of a charitable organization.
|
|
|
These waivers may not continue indefinitely and may be discontinued at any time without notice.
Additional Purchase
Generally, all purchases must be made in cash. However, the Fund reserves the right to accept payment in readily marketable securities instead of cash in accordance with procedures approved by the Fund’s Board of Trustees. If payment is made in securities, the Fund will value the securities in the same manner in which it computes its NAV.
DISTRIBUTION PLAN (Class A Shares)
The Fund has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the “Plan”) that allows Class A Shares to pay distribution and other fees (“Rule 12b-1 Fees”) for the sale and distribution of the Fund’s shares and for services provided to shareholders by the Distributor or the Adviser. The Plan permits the Fund to pay the Distributor and the Adviser Rule 12b-1 Fees as compensation for services and expenses in connection with the distribution of Fund shares. The Distributor must approve all payments made under the plan and may pay any or all amounts received under the Plan to other persons, including the Adviser, for any distribution, promotional or shareholder support services. Up to 0.25% of the Rule 12b-1 Fee may be used as a shareholder servicing fee. The Class A Shares pay an annual Rule 12b-1 Fee equal to 0.25% of its average daily net assets. Because these fees are paid out of the Fund’s assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. During the fiscal period ended March 31, 2012, there were no fees incurred under the plan for Class A Shares since they were new effective August 1, 2012. During the fiscal year ended March 31, 2013, there was $140 of Rule 12b-1 fees incurred by Class A.
Under the Plan, the Fund may engage in any activities related to the distribution of Fund shares, including without limitation the following: (a) payments, including incentive compensation, to securities dealers or other financial intermediaries, financial institutions, investment advisers and others that are engaged in the sale of shares of the Fund, or that may be advising shareholders of the Fund regarding the purchase, sale or retention of shares of the Fund or that holds Fund shares in omnibus accounts or as shareholder of record, or provides shareholder or administrative services to the Fund and its shareholders; (b) expenses of maintaining personnel (including personnel of organizations with which the Fund has entered into agreements related to the Plan) who engage in or support distribution of shares of the Fund; (c) costs of preparing, printing and distributing prospectuses and statements of additional information and reports of the Fund for recipients other than existing shareholders of the Fund; (d) costs of formulating and implementing marketing and promotional activities, including, but not limited to, sales seminars, direct mail promotions and television, radio, newspaper, magazine and other mass media advertising; (e) costs of preparing, printing and distributing sales literature; (f) costs of obtaining such information, analyses and reports with respect to marketing and promotional activities as the Fund may, from time to time, deem advisable; (g) costs of
20
implementing and operating the Plan; (h) payments made to intermediaries that that render shareholder support services not otherwise provided by the Fund’s transfer agent, including, but not limited to, expenses related processing new account applications, transmitting customer transaction information to the Fund’s transfer agent, answering routine shareholder inquiries, providing office space, equipment and telephone facilities, and providing such other shareholder services as the Fund may reasonably request.
Quarterly reports of the amounts expended under the Plan, and the purposes for which such expenditures were incurred, must be made to the Board for its review. The following are the principal types of activities for which payments were made, and the amounts for each, for the fiscal year ended March 31, 2013:
|
Expense Type
|
|
Class A
|
|
Advertising
|
|
-
|
|
Printing and postage
|
|
-
|
|
Compensation to underwriter
|
|
$28
|
|
Compensation to broker-dealers
|
|
-
|
|
Compensation to sales personnel
|
|
-
|
|
Other
|
|
-
|
|
|
|
$28
|
The Trustees expect that the Plan could significantly enhance the Fund’s ability to expand distribution of shares of the Fund. It is also anticipated that an increase in the size of the Fund will produce economies of scale that benefit the shareholders, facilitate more efficient portfolio management, and assist the Fund in seeking to achieve its investment objective.
The Plan has been approved by the Fund’s Board of Trustees, including a majority of the Trustees who are not “interested persons” of the Fund and who have no direct or indirect financial interest in the Plan or any related agreement, by a vote cast in person. Continuation of the Plan and the related agreements must be approved by the Trustees annually, in the same manner, and the Plan or any related agreement may be terminated at any time without penalty by a majority of such independent Trustees or by a majority of the outstanding shares of the Fund. Any amendment increasing the maximum percentage payable under the Plan or other material change must be approved by a majority of the outstanding shares of the Fund, and all other material amendments to the Plan or any related agreement must be approved by a majority of the independent Trustees.
The Trust understands that service organizations may charge fees to their customers who are the beneficial owners of the Fund, in connection with their accounts with such service organizations. Any such fees are not within and would be in addition to any amounts which may be received by an institution under the applicable 12b-1 Plan. Under the terms of each servicing agreement entered into with the Trust, service organizations are required to provide to their customers a schedule of any fees that they may charge in connection with customer investments in the Fund.
Finder’s Fee Commissions
Financial intermediaries who sell $1 million or more of Class A shares in the aggregate of the Fund may receive a finder’s fee. If any defined contribution plan redeems within 18 months of the purchase date all of the shares for which a finder’s fee has been paid, the Adviser may reclaim the finder’s fee paid to the financial intermediary rather than charge a contingent deferred sales charge to the plan. The Adviser reserves the right to alter or change the finder’s fee policy at any time.
Finder’s Fees Paid in the last Fiscal Year
No finder’s fees were paid in the last fiscal year.
21
Payment of Additional Cash Compensation
On occasion, the Adviser may make payments out of its resources and legitimate profits, which may include profits the Adviser derives from investment advisory fees paid by the Fund, to financial intermediaries as
incentives to market the Fund, to cooperate with the Adviser’s promotional efforts, or in recognition of the provision of administrative services and marketing and/or processing support. These payments are often referred to as “additional
cash compensation” and are in addition to the sales charges, Rule 12-1 fees, and payments to financial intermediaries as discussed above. The payments are made pursuant to agreements between financial intermediaries and the Adviser and do not
affect the price investors pay to purchase shares of the Fund, the amount the Fund will receive as proceeds from such sales, or the amount of Rule 12b-1 fees and other the expenses paid by the Fund.
Additional cash compensation payments may be used to pay financial intermediaries for: (1) transaction support, including any one-time charges for establishing access to Fund shares on particular trading systems (known
as “platform access fees”); (2) program support, such as expenses related to including the Funds in retirement programs, fee-based advisory or wrap fee programs, fund supermarkets, bank or trust company products, and/or insurance programs
(e.g., individual or group annuity contracts); (3) marketing support, such as providing representatives of the Adviser access to sales meetings, sales representatives and management representatives; (4) firm support, such as business planning
assistance, advertising, and assistance with educating sales personnel about the Funds and shareholder financial planning needs; (5) providing shareholder and administrative services; and (6) providing other distribution-related or asset retention
services.
Additional cash compensation payments generally are structured as basis point payments on gross or net sales or, in the case of platform access fees, fixed dollar amounts.
In addition to member firms of the Financial Industry Regulatory Authority, Inc. (“FINRA”), the Adviser or Distributor also reserves the ability to make payments, as described above, to other financial
intermediaries that sell or provide services to the Fund and shareholders, such as banks, insurance companies, and plan administrators. These firms may include affiliates of the Adviser. You should ask your financial intermediary whether it receives
additional cash compensation payments, as described above, from the Adviser or Distributor or their respective affiliates.
The Adviser, the Distributor and their affiliates also may pay non-cash compensation to financial intermediaries and their representatives in the form of (1) occasional gifts; (2) occasional meals, tickets or other
entertainment; and/or (3) sponsorship support of regional or national conferences or seminars. Such non-cash compensation will be made subject to applicable law.
PURCHASES AND SALES THROUGH BROKER DEALERS
The Fund may be purchased through broker dealers and other intermediaries. The Fund has authorized one or more brokers to receive on its behalf purchase and redemption orders. Such brokers are authorized to designate
other intermediaries to receive purchase and redemption orders on the Fund's behalf. The Fund will be deemed to have received a purchase or redemption order when an authorized broker or, if applicable, a broker's authorized designee, received the
order. Customer orders will be priced at the Fund's net asset value next computed after they are received by an authorized broker or the broker's authorized designee.
ANTI-MONEY LAUNDERING PROGRAM
The Trust has established an Anti-Money Laundering Compliance Program (the “Program”) as required by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (“USA PATRIOT Act”). To ensure compliance with this law, the Program provides for the development of internal practices, procedures and controls, designation of anti-money laundering compliance officers, an ongoing
training program and an independent audit function to determine the effectiveness of the Program.
Procedures to implement the Program include, but are not limited to, determining that the Fund’s transfer agent has established proper anti-money laundering procedures, reporting suspicious and/or fraudulent
activity and a
22
complete and thorough review of all new account applications. The Fund will not transact business with any person or entity whose identity cannot be adequately verified under the provisions of the USA PATRIOT Act.
CUSTODIAN
US Bank N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is custodian of the Fund's investments. The custodian acts as the Fund's depository, safekeeps its portfolio securities, collects all income and other payments with respect thereto, disburses funds at the Fund's request and maintains records in connection with its duties.
FUND SERVICES
Mutual Shareholder Services, LLC (“MSS”), 8000 Town Centre Drive, Suite 400, Broadview Heights, OH 44147, acts as the Fund's transfer agent. MSS maintains the records of the shareholders’ accounts, answers shareholders' inquiries concerning their accounts, processes purchases and redemptions of the Fund's shares, acts as dividend and distribution disbursing agent and performs other transfer agent and shareholder service functions. MSS receives an annual fee of $11.50 per shareholder (subject to a minimum monthly fee of $775 per Fund) for these transfer agency services.
In addition, MSS provides the Fund with fund accounting services, which includes certain monthly reports, record-keeping and other management-related services. For its services as fund accountant, MSS receives an annual fee based on the average value of the Fund. These fees are: from $0 to $25 million in assets the annual fee is $21,000, from $25 million to $50 million in assets the annual fee is $30,500, from $50 million to $75 million in assets the annual fee is $36,250, from $75 million to $100 million in assets the annual fee is $42,000, from $100 million to $125 million in assets the annual fee is $47,750, from $125 million to $150 million in assets the annual fee is $53,500, and for asset above $150 million the annual fee is $59,250. For the fiscal year ended March 31, 2011, the Fund paid MSS $32,323 for transfer agent and accounting services. For the fiscal year ended March 31, 2012, the Fund paid MSS $36,632 for transfer agent and accounting services. For the fiscal year ended March 31, 2013, the Fund paid MSS $39,751 for transfer agent and accounting services.
Premier Fund Solutions, Inc. (“PFS”) provides the Fund with administrative services, including regulatory reporting and necessary office equipment, personnel and facilities. PFS receives a monthly fee from the Fund equal to an annual rate of 0.07% of the Fund's assets under $200 million, 0.05% of the next $500 million of the Fund's average daily net assets, and 0.03% of the average daily net assets of the Fund thereafter (subject to a minimum monthly fee of $2,000 for the first class and an additional $500 for each additional class). For the fiscal year ended March 31, 2011, the Fund paid PFS $24,002. For the fiscal year ended March 31, 2012, the Fund paid PFS $24,068. For the fiscal year ended March 31, 2013, the Fund paid PFS $27,886.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of Cohen Fund Audit Services, Ltd., 1350 Euclid Ave., Suite 800, Cleveland, OH 44115, has been selected as independent registered public accounting firm for the Fund for the fiscal year ending March 31, 2014. Cohen Fund Audit Services, Ltd. performs an annual audit of the Fund's financial statements and provides financial, tax and accounting consulting services as requested.
DISTRIBUTOR
Rafferty Capital Markets, LLC (“RCM”), located at 1010 Franklin Avenue, Suite 101 - 3rd Floor, Garden City, NY 11530, serves as the Fund’s principal underwriter in connection with the offer and sale of the Fund’s shares. RCM also reviews and files all proposed advertisements and sales literature with appropriate regulators. For the fiscal periods ended March 31, 2012 and 2013, the Adviser paid RCM $9,090.00 and $6,548, respectively. Compensation for the services performed by the Distributor is paid by the Adviser from its own resources and/or from available distribution fees (see “Distribution Plan” above).
23
DISCLOSURE OF PORTFOLIO HOLDINGS
The Fund is required to include a schedule of portfolio holdings in its annual and semi-annual reports to shareholders, which are sent to shareholders within 60 days of the end of the second and fourth fiscal quarters and which are filed with the SEC on Form N-CSR within 70 days of the end of the second and fourth fiscal quarters. The Fund also is required to file a schedule of portfolio holdings with the SEC on Form N-Q within 60 days of the end of the first and third fiscal quarters. The Fund must provide a copy of the complete schedule of portfolio holdings as filed with the SEC to any shareholder of the Fund, upon request, free of charge. This policy is applied uniformly to all shareholders of the Fund without regard to the type of requesting shareholder (i.e., regardless of whether the shareholder is an individual or institutional investor). Information contained in annual and semi-annual reports mailed to shareholders, as well as information filed with the SEC on Form N-Q and information posted on the Fund’s website, is public information. All other information is non-public information.
The Fund has an ongoing relationship with third party servicing agents to release portfolio holdings information on a daily basis in order for those parties to perform their duties on behalf of the Fund. These third party servicing agents are the Adviser, Transfer Agent, Fund Accounting Agent, Administrator and Custodian. The Fund also may disclose portfolio holdings, as needed, to auditors, legal counsel, proxy voting services (if applicable), pricing services, printers, parties to merger and reorganization agreements and their agents, and prospective or newly hired investment advisers or sub-advisers. The lag between the date of the information and the date on which the information is disclosed will vary based on the identity of the party to whom the information is disclosed. For instance, the information may be provided to auditors within days of the end of an annual period, while the information may be given to legal counsel or prospective sub-advisers at any time. This information is disclosed to all such third parties under conditions of confidentiality. “Conditions of confidentiality” include (i) confidentiality clauses in written agreements, (ii) confidentiality implied by the nature of the relationship (e.g., attorney-client relationship), (iii) confidentiality required by fiduciary or regulatory principles (e.g., custody relationships) or (iv) understandings or expectations between the parties that the information will be kept confidential. The Fund also releases information to Morningstar on a delayed basis after the information has been filed with the SEC or otherwise made public. The Fund believes, based upon its size and history, that these are reasonable procedures to protect the confidentiality of the Fund’s portfolio holdings and will provide sufficient protection against personal trading based on the information.
Except as provided above, the Fund is prohibited from entering into any arrangements with any person to make available information about the Fund’s portfolio holdings without the specific approval of the Board. The Adviser must submit any proposed arrangement pursuant to which the Adviser intends to disclose the Fund’s portfolio holdings to the Board, which will review such arrangement to determine (i) whether it is in the best interests of Fund shareholders, (ii) whether the information will be kept confidential and (iii) whether the disclosure presents a conflict of interest between the interests of Fund shareholders and those of the Adviser, or any affiliated person of the Fund, or the Adviser. Additionally, the Fund, the Adviser, and any affiliated persons of the Adviser, are prohibited from receiving compensation or other consideration, for themselves or on behalf of the Fund, as a result of disclosing the Fund’s portfolio holdings.
FINANCIAL STATEMENTS
The financial statements and independent registered public accounting firm’s report required to be included in the Statement of Additional Information are incorporated herein by reference to the Fund’s Annual Report to Shareholders for the year ended March 31, 2013. The Trust will provide the Annual Report without charge at written or telephone request.
PROXY VOTING STATEMENT
The Board of Trustees of the Trust has delegated responsibilities for decisions regarding proxy voting for securities held by the Fund to the Adviser. The Adviser will vote such proxies in accordance with its proxy policies and procedure. In some instances, the Adviser may be asked to cast a proxy vote that presents a conflict between the interests of the Fund’s shareholders, and those of the Adviser or an affiliated person of the Adviser. In such a case, the Trust’s policy requires that the Adviser abstain from making a voting decision and to forward all necessary proxy voting materials to the Trust to enable the Board of Trustees to make a voting decision. When the Board of
24
Trustees of the Trust is required to make a proxy voting decision, only the Trustees without a conflict of interest with regard to the security in question or the matter to be voted upon shall be permitted to participate in the decision of how the
Fund’s vote will be cast.
The Adviser’s proxy voting policies and procedures are attached as Appendix A to this Statement of Additional Information.
MORE INFORMATION. The actual voting records relating to portfolio securities during the most recent 12-Month period ended June 30 will be available after August 31 without charge, upon request by calling toll-free,
1-877-385-2720 or by accessing the SEC’s website at www.sec.gov. In addition, a copy of the Fund’s proxy voting policies and procedures are also available by calling 1-877-385-2720 and will be sent within three business days of receipt of
a request.
25
NEIMAN FUNDS MANAGEMENT, LLC
& NEIMAN FUNDS
PROXY VOTING POLICIES AND PROCEDURES
July 22, 2003
|
Pursuant to the recent adoption by the Securities and Exchange Commission (the “Commission”) of Rule 206(4)-6 (17 CFR 275.206(4) -6) and amendments to Rule 204-2 (17 CFR 275.204 -2) under the Investment Advisers Act of 1940 (the “Act”), it is a fraudulent, deceptive, or manipulative act, practice or course of business, within the meaning of Section 206(4) of the Act, for an investment adviser to exercise voting authority with respect to client securities, unless (i) the adviser has adopted and implemented written policies and procedures that are reasonably designed to ensure that the adviser votes proxies in the best interests of its clients, (ii) the adviser describes its proxy voting procedures to its clients and provides copies on request, and (iii) the adviser discloses to clients how they may obtain information on how the adviser voted their proxies.
In order to fulfill its responsibilities under the Act, Neiman Funds Management, LLC, (hereinafter “we” or “our”) has adopted the following policies and procedures for proxy voting with regard to companies in investment portfolios of our clients.
KEY OBJECTIVES
The key objectives of these policies and procedures recognize that a company’s management is entrusted with the day-to-day operations and longer term strategic planning of the company, subject to the oversight of the company’s board of directors. While “ordinary business matters” are primarily the responsibility of management and should be approved solely by the corporation’s board of directors, these objectives also recognize that the company’s shareholders must have final say over how management and directors are performing, and how shareholders’ rights and ownership interests are handled, especially when matters could have substantial economic implications to the shareholders.
Therefore, we will pay particular attention to the following matters in exercising our proxy voting responsibilities as a fiduciary for our clients:
Accountability
. Each company should have effective means in place to hold those entrusted with running a company’s business accountable for their actions. Management of a company should be accountable to its board of directors and the board should be accountable to shareholders.
Alignment of Management and Shareholder Interests
. Each company should endeavor to align the interests of management and the board of directors with the interests of the company’s shareholders. For example, we generally believe that compensation should be designed to reward management for doing a good job of creating value for the shareholders of the company.
Transparency
. Promotion of timely disclosure of important information about a company’s business operations and financial performance enables investors to evaluate the performance of a company and to make informed decisions about the purchase and sale of a company’s securities.
DECISION METHODS
We generally believe that the individual portfolio managers that invest in and track particular companies are the most knowledgeable and best suited to make decisions with regard to proxy votes. Therefore, we rely on those individuals to make the final decisions on how to cast proxy votes.
26
No set of proxy voting guidelines can anticipate all situations that may arise. In special cases, we may seek insight from our managers and analysts on how a particular proxy proposal will impact the financial prospects of a company, and vote accordingly.
In some instances, a proxy vote may present a conflict between the interests of a client, on the one hand, and our interests or the interests of a person affiliated with us, on the other. In such a case, we will abstain from making a voting decision and will forward all of the necessary proxy voting materials to the client to enable the client to cast the votes.
SUMMARY OF PROXY VOTING GUIDELINES
Election of the Board of Directors
We believe that good corporate governance generally starts with a board composed primarily of independent directors, unfettered by significant ties to management, all of whose members are elected annually. In addition, key board committees should be entirely independent.
The election of a company’s board of directors is one of the most fundamental rights held by shareholders. Because a classified board structure prevents shareholders from electing a full slate of directors annually, we will generally support efforts to declassify boards or other measures that permit shareholders to remove a majority of directors at any time, and will generally oppose efforts to adopt classified board structures.
Approval of Independent Auditors
We believe that the relationship between a company and its auditors should be limited primarily to the audit engagement, although it may include certain closely related activities that do not raise an appearance of impaired independence.
We will evaluate on a case-by-case basis instances in which the audit firm has a substantial non-audit relationship with a company to determine whether we believe independence has been, or could be, compromised.
Equity-based compensation plans
We believe that appropriately designed equity-based compensation plans, approved by shareholders, can be an effective way to align the interests of shareholders and the interests of directors, management, and employees by providing incentives to increase shareholder value. Conversely, we are opposed to plans that substantially dilute ownership interests in the company, provide participants with excessive awards, or have inherently objectionable structural features.
We will generally support measures intended to increase stock ownership by executives and the use of employee stock purchase plans to increase company stock ownership by employees. These may include:
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1.
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Requiring senior executives to hold stock in a company.
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2.
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Requiring stock acquired through option exercise to be held for a certain period of time.
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3.
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Using restricted stock grants instead of options.
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4.
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Awards based on non-discretionary grants specified by the plan’s terms rather than subject to management’s discretion.
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While we evaluate plans on a case-by-case basis, we will generally oppose plans that have the following features:
|
1.
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Annual option grants that would exceed 2% of outstanding shares.
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2.
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Ability to issue options with an exercise price below the stock’s current market price.
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3.
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Automatic share replenishment (“evergreen”) feature.
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27
|
4.
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Authorization to permit the board of directors to materially amend a plan without shareholder approval.
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5.
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Authorizes the re-pricing of stock options or the cancellation and exchange of options without shareholder approval.
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These are guidelines, and we consider other factors, such as the nature of the industry and size of the company, when assessing a plan’s impact on ownership interests.
Corporate Structure
We view the exercise of shareholders’ rights, including the rights to act by written consent, to call special meetings and to remove directors, to be fundamental to good corporate governance.
Because classes of common stock with unequal voting rights limit the rights of certain shareholders, we generally believe that shareholders should have voting power equal to their equity interest in the company and should be able to approve or reject changes to a company’s by-laws by a simple majority vote.
Because the requirement of a supermajority vote can limit the ability of shareholders to effect change, we will support proposals to remove super-majority (typically from 66.7% to 80%) voting requirements for certain types of proposals and oppose proposals to impose super-majority requirements.
We will generally support the ability of shareholders to cumulate their votes for the election of directors.
Shareholder Rights Plans
While we recognize that there are arguments both in favor of and against shareholder rights plans, also known as poison pills, such measures may tend to entrench current management, which we generally consider to have a negative impact on shareholder value.
We believe the best approach is for a company to seek shareholder approval of rights plans and we generally support shareholder resolutions requesting that shareholders be given the opportunity to vote on the adoption of rights plans.
We will generally be more inclined to support a shareholder rights plan if the plan (i) has short-term “sunset” provisions, (ii) is linked to a business strategy that will likely result in greater value for shareholders, (iii) requires shareholder approval to reinstate the expired plan or adopt a new plan at the end of its term, and (iv) is subject to mandatory review by a committee of independent directors.
A copy of these Proxy Voting Policies and Procedures is available to our clients, without charge, upon request, by calling
1-877-385-2720
and on our website at
http://www.neimanfunds.com
. We will send a copy of these Proxy Voting Policies and Procedures within three business days of receipt of a request, by first-class mail or other means designed to ensure equally prompt delivery.
In addition, we will provide each client, without charge, upon request, information regarding the proxy votes cast by us with regard to the client’s securities.
28
Neiman Balanced Allocation Fund
Class A Shares (NBAFX)
Class C Shares (NBCFX)
For Investors Seeking Total Return
Prospectus
August 1, 2013
As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved of these securities, nor has the Commission determined that this Prospectus is complete or accurate. Any representation to the contrary is a criminal offense.
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Table of Contents
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Summary Section
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1
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Investment Objective
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1
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Fees and Expenses of the Fund
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1
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The Principal Investment Strategy of the Fund.
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2
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The Principal Risks of Investing in the Fund
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2
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Performance History
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4
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Management
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5
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Purchase and Sale of Fund Shares
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5
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Tax Information
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5
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Payments to Broker-Dealers and Other Financial Intermediaries
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5
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Investment Objectives, Principal Investment Strategy,
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Related Risks, and Disclosure of Portfolio Holdings
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5
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Investment Objective
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5
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The Principal Investment Strategies of the Fund.
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5
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The Investment Selection Process Used by the Fund
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6
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The Principal Risks of Investing in the Fund
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6
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Portfolio Holdings Disclosure
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8
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Management
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8
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The Investment Adviser
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8
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Shareholder Information
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9
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Pricing of Fund Shares
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9
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How to Purchase Shares
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10
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Purchases Through Financial Intermediaries
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10
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Fund Direct Purchases
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10
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Customer Identification Program
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11
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Sales Charges
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11
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Class A Shares
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11
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Class C Shares
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13
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Sales Charge Waivers
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13
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Rule 12b-1 Fees
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14
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Minimum Investments
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14
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Types of Account Ownership.
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15
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Instructions For Opening and Adding to an Account
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15
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Telephone and Wire Transactions
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16
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Tax-Deferred Plans
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16
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Types of Tax-Deferred Accounts
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17
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Automatic Investment Plans
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17
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Instructions For Selling Fund Shares
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18
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Additional Redemption Information
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19
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Shareholder Communications
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20
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Dividends and Distributions.
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20
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Market Timing
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20
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Taxes
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20
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Other Fund Service Providers
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21
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Privacy Policy
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22
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Financial Highlights
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22
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Summary Section
Investment Objective
• The Neiman Balanced Allocation Fund seeks total return.
Fees and Expenses of the Fund
The following table describes the expenses and fees that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in the Fund. More information about these and other discounts is available from your financial professional and in “Sales Charges” on page 11 of the Fund's prospectus and “Shares of the Fund” on page 17 of the Fund's statement of additional information.
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Shareholder Fees
(fees paid directly from your investment)
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Class A Shares
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Class C Shares
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Maximum Sales Charge (Load) Imposed on Purchases
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5.75
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%
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None
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(as percentage of offering price)
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Maximum Deferred Sales Charge (Load)
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None
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None
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(as percentage of lower of purchase price and current NAV)
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Maximum Sales Charge (Load) Imposed on Reinvested Dividends
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None
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None
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Annual Fund Operating Expenses
(expenses that you
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pay each year as a percentage of the value of your investment)
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Management Fees
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1.00
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%
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1.00
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%
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Distribution and Service (12b-1) Fees
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0.25
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%
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1.00
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%
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Other Expenses
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0.83
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%
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0.83
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%
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Acquired Fund Fees and
Expenses
(a)
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1.09
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%
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1.09
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%
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Total Annual Fund Operating Expenses
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3.17
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%
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3.92
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%
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|
Fee Waiver/Expense
Reimbursement
(b)
|
(
0.63
|
%)
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(
0.63
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%)
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Total Annual Fund Operating Expenses After Fee Waiver /
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2.54
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%
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3.29
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%
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|
Expense Reimbursement
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|
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(a)
The Annual Fund Operating Expenses in this fee table will not correlate to the expense ratio in the Fund's financial highlights because the financial highlights include only the direct operating expenses incurred by the Fund, not the indirect costs of investing in Acquired Funds.
(b)
The adviser has contractually agreed to waive management fees and reimburse expenses to the extent necessary to maintain total annual operating expenses of the Fund (excluding brokerage fees and commissions, interest and other borrowing expenses, taxes, indirect expenses (such as expenses of other investment companies in which the Fund invests) and extraordinary expenses) at 1.45% of its average daily net assets for Class A Shares and at 2.20% of its average daily net assets for Class C Shares through July 31, 2014. The addition of certain non-waivable and excluded expenses may cause the Fund's total annual fund operating expenses after waivers and reimbursements to exceed the maximum total annual fund operating expenses agreed to by the Adviser. The fee waiver will automatically terminate on July 31, 2014 unless it is renewed by the Adviser. The Adviser may not terminate the fee waiver or expense reimbursement before July 31, 2014.
Expense Example
The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% annual return each year and that the Fund’s operating expenses remain the same each year. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
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|
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One Year
|
|
Three Years
|
|
Five Years
|
|
Ten Years
|
|
Class A Shares
|
|
$817
|
|
$
1,441
|
|
$2,087
|
|
$3,810
|
|
Class C Shares
|
|
$432
|
|
$
1,138
|
|
$1,961
|
|
$4,099
|
Prospectus 1
You would pay the following fees and expenses if you did not redeem your Class C shares:
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|
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One Year
|
|
Three Years
|
|
Five Years
|
|
Ten Years
|
|
Class C Shares
|
|
$332
|
|
$
1,138
|
|
$1,961
|
|
$4,099
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Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 63.16% of the average value of its portfolio.
The Principal Investment Strategy of the Fund
The Fund normally invests at least 50% of its assets (at the time of purchase) in shares of equity mutual funds (open-end investment companies) registered under the Investment Company Act of 1940 and at least 25% of its assets (at the time of purchase) in shares of fixed income mutual funds (open-end investment companies) registered under the Investment Company Act of 1940. The mutual funds in which the Funds may invest are referred to as “underlying funds” throughout this Prospectus. The underlying funds will be drawn from a variety of investment categories, including growth and value funds, foreign and domestic funds; corporate, government and high yield bond funds; and large, mid and small cap funds. The Fund’s investment adviser will allocate assets among equity and fixed income underlying funds in an attempt to achieve overall diversification, minimize risk, and maximize total return. From time to time, the investment adviser may invest a significant portion of the Fund’s assets in underlying funds in a particular industry sector. Underlying funds will be sold when they have realized their anticipated value or when new investment opportunities with a higher expected return are acquired. The Fund’s investment objective may be changed by the Board of Trustees without shareholder approval. You will receive written notice of any material change in the Fund’s objective.
The Principal Risks of Investing in the Fund
The Fund may invest in underlying funds that have any or all of these characteristics and related risks:
Risks in General
The same factors that affect stock market performance generally affect the underlying funds owned by the Fund. Domestic economic growth and market conditions, interest rate levels, and political events are among these factors.
Mutual Fund and Affiliated Fund Risk
The Fund invests a substantial portion of its assets in other mutual funds. To the extent that the Fund invests in mutual funds, the Fund will indirectly bear its proportionate share of any expenses (such as operating expenses and advisory fees) that may be paid by the underlying funds. These expenses would be in addition to the advisory fee and other expenses that the Fund bears in connection with its own operations. The Fund may invest in other mutual funds advised by the Fund's adviser (“affiliated mutual funds”). Because the Fund's adviser or an affiliate provides services and receives fees from affiliated mutual funds, the Fund's investment in an affiliated mutual fund benefits the adviser and/or its affiliate. In addition, if the Fund holds a significant percentage of the shares of one or more affiliated mutual funds, a conflict of interest may arise.
Prospectus 2
Risks of Investing in Underlying Funds that Own Common Stocks
The Fund invests in shares of equity underlying funds that own common stocks, which subjects the Fund and its shareholders to the risks associated with common stock investing. Overall stock market risks may affect the value of the Fund. When the value of the Fund's investments goes down, your investment in the Fund decreases in value and you could lose money.
Risks of Investing in Underlying Funds that Own Fixed Income Securities
The Fund may invest in underlying funds that own bonds and other debt securities. These securities are subject to the risk that their issuer may not be able to repay the principal and interest when due. In addition, the value of bond and other debt securities held by an underlying fund can change in response to changes in prevailing interest rates, causing volatility and possible loss of value as rates increase.
Risks of Small and Medium Sized Companies
To the extent the Fund invests in underlying funds that own stocks of small and medium capitalization companies, the Fund may be subject to additional risks. The earnings and prospects of these companies are more volatile than larger companies. Small and medium sized companies may have limited product lines and markets, and may experience higher failure rates than do larger companies.
Foreign Risk
To the extent the Fund invests in underlying funds that own foreign securities, including American Depositary Receipts (“ADRs”), the Fund may be subject to risks not usually associated with owning securities of U.S. issuers. These risks include adverse political, social and economic developments, differing auditing and legal standards, war, expropriation and nationalization.
Emerging Markets
To the extent the Fund invests in underlying funds that own securities in emerging markets, the Fund will be subject to emerging market risks. The risks of foreign securities are typically increased in emerging markets. These risks include, among other things, political and economic instability, less developed securities markets and currency devaluations.
Sector Risk
Sector risk is the possibility that stocks within the same group of industries will decline in price due to sector-specific market or economic developments. If the adviser invests a significant portion of the Fund's assets in underlying funds in a particular sector, the Fund is subject to the risk that companies in the same sector are likely to react similarly to legislative or regulatory changes, adverse market conditions and/or increased competition affecting that market segment.
Risk of Non-Diversification
The Fund may invest in underlying funds that are non-diversified. A non-diversified fund has the ability to take larger positions in a smaller number of securities than a portfolio that is “diversified.” Investing in non-diversified funds may result in greater volatility.
High Yield Securities Risk
The Fund may invest in underlying funds that purchase high yield securities. High yield securities are considered speculative and are less likely to have the capacity to pay interest and repay principal when due in the event of adverse business, financial or economic conditions.
Prospectus 3
Performance History
The bar chart and performance table below show the variability of the Fund's returns, which is some indication of the risks of investing in the Fund. The bar chart shows performance of the Fund's Class A shares for each full calendar year since the Fund's inception. Returns in the bar chart do not reflect sales charges and would be lower if they did. Returns would be lower for the Class C shares. The performance table compares the performance of the Fund's Class A shares and Class C shares over time to the performance of a broad-based market index . You should be aware that the Fund's past performance (before and after taxes) may not be an indication of how the Fund will perform in the future. Updated performance information is available by calling 1-877-385-2720.
For the period from January 1, 2013 through June 30, 2013 the total return for the Fund was 4.20% .
Best Quarter (March 31, 2012) + 7.63% Worst Quarter (September 30, 2011) -10.50%
|
|
|
|
Since
|
|
|
AVERAGE ANNUAL TOTAL RETURN
|
|
|
Inception
|
|
|
FOR THE PERIODS ENDED 12/31/12
|
1 Year
|
|
(7/16/2010
|
)
(A)
|
|
|
|
NEIMAN BALANCED ALLOCATION FUND
|
|
|
|
|
|
Class A shares Return Before Taxes
|
4.78
|
%
|
5.08
|
%
|
|
Return After Taxes on Distributions
|
4.35
|
%
|
4.68
|
%
|
|
Return After Taxes on Distributions and Sale of Fund Shares
|
3.80
|
%
|
4.11
|
%
|
|
Class C shares Return Before Taxes
|
10.31
|
%
|
6.80
|
%
|
|
S&P 500 Index (does not reflect deductions for fees, expenses or taxes)
|
16.00
|
%
|
13.68
|
%
|
(A)
The Neiman Balanced Allocation Fund commenced operations on July 6, 2010. The performance numbers represent performance beginning on the first day of security trading (July 16, 2010).
The average annual total returns for the Fund's Class A and C shares are reduced to reflect the maximum applicable sales charges for each class of shares and assume Class C shareholders redeem all of their shares at the end of the period indicated and pay the contingent deferred sales charge in year one. After-tax returns are calculated using the highest historical individual federal marginal income tax rate and do not reflect the impact of state and local taxes. Actual after-tax returns depend on a shareholder's tax situation and may differ from those shown. After-tax returns are not relevant for shareholders who hold Fund shares in tax-deferred accounts or to shares held by non-taxable entities. After-tax returns for Class A shares will vary from the after-tax returns presented for Class C shares.
Prospectus 4
Management
Investment Adviser
Neiman Funds Management LLC
|
Portfolio Managers
Harvey Neiman and Daniel Neiman have managed the Fund since July 26, 2011. Harvey Neiman is the Managing Member and a Portfolio Manager of the Adviser. Daniel Neiman is a Member and a Portfolio Manager of the Adviser.
Purchase and Sale of Fund Shares (Class A Shares and Class C Shares)
The minimum initial and subsequent investment amounts for various types of accounts offered by the Fund are shown below.
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Initial
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Additional
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Regular Account
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$
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2,500
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$100
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Automatic Investment Plan
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$
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1,000
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$100
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*
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IRA Account
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$
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1,000
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$100
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*An Automatic Investment Plan requires a $100 minimum automatic monthly or quarterly investment.
You may purchase or redeem Fund shares on any business day directly with the Fund or through your financial intermediary. You may conduct transactions by mail (Neiman Funds, c/o Mutual Shareholder Services, 8000 Town Centre Drive, Suite 400, Broadview Heights, Ohio 44147), by wire, or by telephone at 1-877-385-2720.
Tax Information
The Fund’s distributions will be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
Investment Objectives, Principal Investment Strategy, Related Risks, and Disclosure of Portfolio Holdings
Investment Objective
• The Neiman Balanced Allocation Fund seeks total return.
The Principal Investment Strategy of the Fund
The Fund normally invests at least 50% of its assets (at the time of purchase) in shares of equity mutual funds (open-end investment companies) registered under the Investment Company Act of 1940 and at least 25% of its assets (at the time of purchase) in shares of fixed income mutual funds (open-end investment companies) registered under the Investment Company Act of 1940.
Prospectus 5
The Investment Selection Process Used by the Fund
Neiman Funds Management LLC (the “Adviser”), invests the Fund's assets primarily in underlying funds for the purpose of providing a diversified asset allocation portfolio across many market sectors. As a balanced allocation fund, the Adviser seeks to provide a portfolio allocation that is neither overly aggressive nor overly conservative, in the attempt to maximize total return while seeking to minimize overall risk. The Fund generally follows widely used asset allocation models in order to achieve its goal of overall diversification and asset allocation.
The Adviser will generally diversify into several investment categories using a variety of factors to make investment decisions such as historical performance, peer group relative performance, standard deviation, investment risk and underlying fund expenses.
The Adviser allocates various percentages of the Fund's assets to be invested in each of several investment categories. The categories selected for diversified investments by the Fund are the more commonly known diversification categories. These categories are frequently referred to as follows: large cap growth, large cap value, mid cap growth, mid cap value, small cap growth, small cap value, international stock, emerging markets stock, corporate bond, government bond, multi-strategy bond, high yield bond, and international bond. Deciding on the percentage amounts to be placed in each category is dictated by current macro economic and market conditions, as well as proprietary screens related to economic and market condition forecasts.
The Adviser continually evaluates the performance of the underlying funds based on benchmarks and category averages. Evaluations are based on consistency of performance and peer related performance. In the event any particular underlying fund investment is lagging its category benchmarks or its category performance averages, a search will be made for other suitable underlying funds within the same category as potential or likely replacement investments. With this constant monitoring of performance and searching for superior performing mutual funds, the Fund adviser will continuously attempt to select from the best performing underlying funds, with the lowest levels of risk, in each allocation category.
The Principal Risks of Investing in the Fund
The Fund may invest in underlying funds that have any or all of these characteristics and related risks:
Risks in General
The same factors that affect stock market performance generally affect the underlying funds owned by the Fund. Domestic economic growth and market conditions, interest rate levels, and political events are among these factors. There is risk that these and other factors may adversely affect the Fund's performance. You should consider your own investment goals, time horizon, and risk tolerance before investing in the Fund. An investment in the Fund may not be appropriate for all investors and is not intended to be a complete investment program. An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. You may lose money by investing in the Fund.
Mutual Fund and Affiliated Fund Risk
The Fund invests a substantial portion of its assets in other mutual funds. As a result, the Fund's performance is directly related to the performance of the underlying mutual funds. The Fund's net asset value will change with the value of the underlying mutual funds and changes in the markets where the underlying mutual funds invest. To the extent that the Fund invests in mutual funds, the Fund will indirectly bear its proportionate share of any expenses (such as operating expenses and advisory fees) that may be paid by the underlying mutual funds. These expenses would be in addition to the advisory fee and other expenses that the Fund bears in connection with its own operations. The Fund may invest in other mutual funds advised by the Fund's adviser (“affiliated mutual funds”). Because the Fund's adviser or an affiliate provides services and receives fees from affiliated mutual funds, the
Prospectus 6
Fund's investment in an affiliated mutual fund benefits the adviser and/or its affiliate. The Fund may hold a significant percentage of the shares of one or more affiliated mutual fund. As a result, the Fund's investment in an affiliated mutual fund may create a conflict of interest because a situation could arise where an action for the Fund could be adverse to the interests of the affiliated mutual fund or vice versa.
Risks of Investing in Underlying Funds that Own Common Stocks
The Fund invests in shares of underlying equity funds that own common stocks, which subjects the Fund and its shareholders to the risks associated with common stock investing. These risks include the financial risk of selecting underlying equity funds that hold common stock. The underlying fund’s individual holdings may not perform as anticipated. There is the risk that the underlying equity funds in which the Fund invests may experience periods of turbulence and instability, and the general risk that domestic and global economies may go through periods of decline and cyclical change. Many factors affect the performance of each underlying fund that the Fund invests in, including the strength of the underlying fund’s holdings. You should be aware that an underlying fund’s share price may decline as a result of poor decisions made by its management. In addition, the share price of common stocks held by the underlying fund may decline if its earnings or revenues fall short of expectations. There are overall stock market risks that may also affect the value of the Fund. Over time, the stock markets tend to move in cycles, with periods when stock prices rise generally and periods when stock prices decline generally. The value of the Fund's investments may increase or decrease more than the stock markets in general.
Risks of Investing in Underlying Funds that Own Fixed Income Securities
The Fund may invest in underlying funds that own bonds and other debt securities. Bonds are subject to the risk that their issuer may not be able to repay the principal and interest when due. In addition, when interest rates increase, the value of bonds generally decreases. Bonds with longer maturities may lose more value due to interest rate increases than bonds with shorter maturities. The Fund's investments may include underlying funds that own high yield bonds. High yield bonds include convertible and non-convertible debt securities rated BBB or lower by Standard & Poor's Corporation, a division of The McGraw-Hill Companies, or Ba or lower by Moody's Investor Services, Inc., as well as securities that are not rated but are considered by the investment adviser to be of similar quality. High yield securities are commonly called “junk bonds.” The Fund's investment in underlying funds that own junk bonds entails a greater risk than an investment in higher-rated securities. High yield securities are predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligation. The market for high yield securities is generally less active than the market for higher quality securities. This may limit the ability of the underlying fund to sell high yield securities at the price at which they are being valued for purposes of calculating net asset value. Although junk bonds typically pay interest at higher rates than investment-grade bonds, there is a greater likelihood that the company issuing the junk bond will default on interest and principal payments.
Risks of Small and Medium Sized Companies
To the extent the Fund invests in underlying funds that own stocks of small and medium capitalization companies, the Fund may be subject to additional risks. The earnings and prospects of these companies are more volatile than larger companies. Small and medium sized companies may experience higher failure rates than do larger companies. The trading volume of securities of small and medium sized companies is normally less than that of larger companies and, therefore, may disproportionately affect their market price, tending to make them fall more in response to selling pressure than is the case with larger companies. Small and medium sized companies may have limited markets, product lines or financial resources and may lack management experience.
Foreign Risk
To the extent the Fund invests in underlying funds that own foreign securities, including American Depositary Receipts (“ADRs”), the Fund may be subject to risks not usually associated with owning securities of U.S. issuers. These risks include adverse political, social and economic developments, differing auditing and legal standards, war, expropriation and nationalization. This also includes the risk that fluctuations in the exchange rates between the U.S. dollar and foreign currencies may negatively affect an investment. Adverse changes in exchange rates may erode or reverse any gains pro-
duced by foreign currency denominated investments and widen any losses. Exchange rate volatility also may affect the ability of an issuer to repay U.S. dollar denominated debt, thereby increasing credit risk. In addition, the costs of foreign investing, including withholding taxes, brokerage commissions, and custodial costs, generally are higher than for U.S. investments. In addition, foreign issuers, brokers, and securities markets may be subject to less government supervision than in the U.S.
Emerging Markets
To the extent the Fund invests in underlying funds that own securities in emerging markets, the Fund will be subject to emerging market risks. The risks of foreign securities are typically increased in emerging markets. For example, political and economic structures in these less developed countries may be new and changing rapidly, which may cause instability. Emerging markets may have relatively unstable governments, economies based on only a few industries and securities markets that trade a small number of securities. The securities markets may also be less developed. These countries are also more likely to experience high levels of inflation, deflation, or currency devaluations, which could hurt their economies and securities markets.
Sector Risk
Sector risk is the possibility that stocks within the same group of industries will decline in price due to sector-specific market or economic developments. If the adviser invests a significant portion of the Fund's assets in underlying funds in a particular sector, the Fund is subject to the risk that companies in the same sector are likely to react similarly to legislative or regulatory changes, adverse market conditions and/or increased competition affecting that market segment. The sectors in which the Fund may be overweighted will vary.
Risk of Non-Diversification
The Fund may invest in underlying funds that are non-diversified. A non-diversified fund has the ability to take larger positions in a smaller number of securities than a portfolio that is “diversified.” Owning underlying funds that are non-diversified increases the risk that the value of the Fund could go down because of the poor performance of a single investment.
High Yield Securities Risk
The Fund may invest in underlying funds that purchase high yield securities. High yield securities are considered speculative and are less likely to have the capacity to pay interest and repay principal when due in the event of adverse business, financial or economic conditions.
Portfolio Holdings Disclosure
A description of the Fund's policies and procedures with respect to the disclosure of the Fund's portfolio securities is available in the Fund's Statement of Additional Information (“SAI”).
Management
The Investment Adviser
Neiman Funds Management LLC is the investment adviser of the Fund and has responsibility for the management of the Fund’s affairs, under the supervision of the Trust's Board of Trustees. The Adviser was organized in 2009. The Adviser serves as investment adviser to the Neiman Funds. The address of the Adviser is 6631 Main Street, Williamsville, NY 14221.
The Fund's investment portfolio is managed on a day-to-day basis by the investment team of Harvey Neiman and Daniel Neiman. Harvey Neiman has been an attorney since 1970. From 1993 through 1999 he was a licensed stock broker, serving with Merrill Lynch, later Morgan Stanley Dean Witter, and later AG Edwards. From 1999 to 2009 he was a portfolio manager for Neiman Capital Management, LLC. Daniel Neiman received a bachelor's degree in finance from Humboldt State
Prospectus 8
University in 1999. He has been managing portfolios since 1999. From 1999 to 2009 he was a portfolio manager for Neiman Capital Management, LLC. Harvey Neiman and Daniel Neiman are founding members of the Adviser.
The Fund's Statement of Additional Information provides information about the portfolio managers’ compensation, other accounts managed by the portfolio managers, and the portfolio managers’ ownership of Fund shares.
Under the Management Agreement, the Adviser, at its own expense and without reimbursement from the Trust, furnishes office space and all necessary office facilities, equipment and executive personnel necessary for managing the Fund. For the fiscal year ended March 31, 2013, the Adviser received management fees, after management fee waivers, of 0.37% of the daily net assets of the Fund. The Adviser has agreed to waive management fees and reimburse expenses to the extent necessary to maintain total annual operating expenses of the Fund (excluding brokerage fees and commissions, interest and other borrowing expenses, taxes, indirect expenses (such as expenses of other investment companies in which the Fund invests) and extraordinary expenses) at 1.45% for Class A Shares and 2.20% for Class C Shares of their average daily net assets through July 31, 2014.
A discussion regarding the basis of the Board of Trustees' approval of the Management Agreement between the Trust and Neiman Funds Management LLC is available in the Fund's semi-annual report to shareholders for the period ended September 30, 2012.
Shareholder Information
Pricing of Fund Shares
The price you pay for a share of the Fund, and the price you receive upon selling or redeeming a share of the Fund, is called the Fund’s net asset value (“NAV”). A separate NAV is calculated for each share class of the Fund. The NAV for a class is calculated by adding the total value of the Fund's investments and other assets allocable to a class, subtracting the liabilities allocable to that class and then dividing that figure by the number of outstanding shares of the class:
Net Asset Value = Total Assets(Class) - Liabilities(Class) / Number of Shares Outstanding (Class)
The NAV is generally calculated as of the close of trading on the New York Stock Exchange (normally 4:00 p.m. Eastern time) every day the Exchange is open. The New York Stock Exchange is generally open every day other than weekends and holidays. All purchases, redemptions or reinvestments of Fund shares will be priced at the next NAV calculated after your order is received in proper form by the Fund’s Transfer Agent, Mutual Shareholder Services. To be in proper form, the purchase order must be complete and contain all the information necessary for the Transfer Agent to process your order. If you purchase shares directly from the Fund, your order must be placed with the Transfer Agent prior to the close of the trading of the New York Stock Exchange in order to be confirmed for that day’s NAV. The NAV of the Fund is calculated based on the reported NAV of the various underlying funds in which the Funds invest. Certain short-term securities are valued at amortized cost, which approximates market value. The market value of an underlying fund's investments is determined primarily on the basis of readily available market quotations for the underlying fund's portfolio securities. The prospectuses for the underlying funds explain the circumstances under which those companies will use fair value pricing and the effects of using fair value pricing. If market prices are not available or, in the Adviser's opinion, market prices do not reflect fair value, or if an event occurs after the close of trading (but prior to the time the NAV is calculated) that materially affects fair value, the Adviser may value the Fund's assets at their fair value according to policies approved by the Fund's Board of Trustees. For example, if trading in a portfolio security is halted and does not resume before the Fund calculates its NAV, the Adviser may need to price the security using the Fund's fair value pricing guidelines. Without a fair value price, short term traders could take advan-
Prospectus 9
tage of the arbitrage opportunity and dilute the NAV of long term investors. Fair valuation of a Fund's portfolio securities can serve to reduce arbitrage opportunities available to short term traders, but there is no assurance that fair value pricing policies will prevent dilution of the Fund's NAV by short term traders. The Fund may use pricing services to determine market value.
How to Purchase Shares
Share Classes: This Prospectus describes classes of shares offered by the Fund: Class A and Class C. The Fund offers these classes of shares so that you can choose the class that best suits your investment needs. Refer to the information below so that you can choose the class that best suits your investment needs. The main differences between the classes are sales charges and ongoing fees. In choosing which class of shares to purchase, you should consider which will be most beneficial to you, given the length of time you expect to hold the shares. Each class of shares in the Fund represents interests in the same portfolio of investments within the Fund. The Fund reserves the right to waive sales charges.
Purchases Through Financial Intermediaries
You may make initial and subsequent purchases of shares of the Fund through a financial intermediary, such as an investment adviser or broker-dealer, bank or other financial institution that purchases shares for its customers. Before investing in the Fund through a financial intermediary, you should read carefully any materials provided by the intermediary together with this prospectus.
If you invest through a brokerage firm or other financial institution, the policies and fees may be different than those described in this prospectus. Financial advisers, financial supermarkets, brokerage firms, and other financial institutions may charge transaction and other fees and may set different minimum investments or limitations on buying or selling shares. Consult a representative of your financial institution if you have any questions.
When shares are purchased this way, the financial intermediary may:
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charge a fee for its services;
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act as the shareholder of record of the shares;
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set different minimum initial and additional investment requirements;
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impose other charges and restrictions;
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designate intermediaries to accept purchase and sale orders on the Fund's behalf; or
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impose an earlier cut-off time for purchase and redemption requests.
The Fund considers a purchase or sale order as received when a financial intermediary receives the order in proper form before 4:00 p.m. Eastern Time. These orders will be priced based on the Fund's NAV, plus any applicable sales charge, next computed after such order is received by the financial intermediary. It is the responsibility of the financial intermediary to transmit properly completed purchase orders to the Fund in a timely manner. Any change in price due to the failure of a Fund to timely receive an order must be settled between the investor and the financial intermediary placing the order.
Shares held through an intermediary may be transferred into your name following procedures established by your intermediary and the Fund. Certain intermediaries may receive compensation from the Fund, the Adviser or their affiliates.
Fund Direct Purchases
You may also purchase shares directly through the Fund’s transfer agent. Your purchase order will be priced based on the Fund’s NAV, plus any applicable sales charge, next computed after your order is received by the Fund. If you are investing directly in the Fund for the first time, you will need
Prospectus 10
to establish an account by completing a Shareholder Account Application (To establish an IRA, complete an IRA Application). To request an application, call toll-free 1-877-385-2720. Your initial investment minimum can be found in the table below. The Fund reserves the right to change the amount of these minimums from time to time or to waive them in whole or in part for certain accounts. Investment minimums may be higher or lower to investors purchasing shares through a brokerage firm or other financial institution.
Customer Identification Program
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. This means that, when you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask for identifying documents, and may take additional steps to verify your identity. We may not be able to open an account or complete a transaction for you until we are able to verify your identity.
Sales Charges
Shares of the Fund are purchased at their NAV plus any applicable sales charge. This is known as the public offering price.
The Fund's Distributor compensates financial intermediaries (broker-dealers), including processing organizations, who sell shares of the Funds. Compensation comes from sales charges, Rule 12b-1 fees and payments by the Adviser.
To obtain free information regarding sales charges and the reduction or elimination or waiver of sales charges on Class A shares, visit www.neimanfunds.com or call 1-877-385-2720. You also may contact your financial intermediary.
Class A Shares
The public offering price for Class A shares of the Fund is the next determined NAV plus a sales charge, unless you qualify for a waiver of the sales charge. The table below shows the amount of sales charge you would pay at different levels of investment and the commissions paid to financial intermediaries at each level of investment.
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Sales Charge as a % of
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Public
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Net
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Financial
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Offering
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Amount
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Intermediary
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Price
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Invested
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Commission
1
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Amount of Investment
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Less than $50,000
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5.75%
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6.10%
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5.00%
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$50,000 but less than $100,000
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4.50%
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4.71%
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3.75%
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$100,000 but less than $250,000
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3.75%
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3.90%
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3.00%
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$250,000 but less than $500,000
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3.00%
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3.09%
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2.50%
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$500,000 but less than $1,000,000
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2.00%
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2.04%
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1.50%
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$1,000,000 or more
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None
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None
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None
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1
As a percentage of the public offering price.
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The Adviser may make a payment to financial intermediaries for your cumu
þ
lative investments of $1 million or more of Class A shares. The Adviser may withhold these payments with respect to short-term investments. If you purchase $1 million or more of Class A shares of the Fund and are not assessed a sales charge at the time of purchase, you may be charged the equivalent of up to 1.00%
Prospectus 11
of the amount invested if you redeem any or all of the Class A shares of a Fund during the first 18 months after purchase. This charge applies to all your purchases. See Finders' Fee Commissions in the Statement of Additional
Information for more details.
The Fund permits you to reduce the initial sales charge you pay on Class A shares by using the Right of Accumulation or a Letter of Intent. Each of these methods for reducing the initial sales charge on Class A shares is
described below. In taking advantage of these methods for reducing the initial sales charge you will pay, you may link your purchases of shares with purchases of shares in accounts owned by your spouse or children under the age of 21 who share your
residential address. It is your responsibility when investing to inform your financial intermediary or the Funds that you would like to have one or more accounts linked together for purposes of reducing the initial sales charge.
Right of Accumulation:
You may qualify for a reduction in the initial sales charge for future purchases of Class A shares based on the current market value of your Class A holdings
from prior purchases through the Right of Accumulation. To calculate the sales charge applicable to your net purchase of Class A shares, you may aggregate your investment with the current market value of any Class A shares of the Fund held
in:
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1.
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Your account(s);
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2.
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Your spouse's account(s);
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3.
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Joint accounts with qualified spouse;
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4.
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Account(s) of children under the age of 21 who share your residential address;
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5.
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Trust accounts established by any of the individuals in items (1) through (3) above. If the person(s) who established the trust is deceased, the trust account may be aggregated with the account(s) of the primary beneficiary of
the trust;
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6.
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Solely controlled business accounts; and
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7.
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Single-participant retirement plans of any of the individuals in items (1) through (3) above.
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In order to obtain any reduction in the initial sales charge, you must, before purchasing Class A shares, inform the Fund or your financial intermediary if you have any of the above types of accounts that can be aggregated with
your current investment in Class A shares to reduce the applicable sales charge. In order to verify your eligibility for a reduced sales charge, you may be required to provide appropriate documentation, such as an account statement or the social
security or tax identification number on an account, so that the Fund may verify (1) the number of shares of the Fund held in your account(s) with the Fund, (2) the number of shares of the Fund held in your account(s) with a financial intermediary,
and (3) the number of shares of the Fund held in an account with a financial intermediary owned by your spouse or by children under the age of 21 who share your residential address.
Letter of Intent:
You may purchase Class A shares at the sales charge rate applicable to the total amount of the purchases you intend to make over a 13-month period. The Fund will
combine the value of your current purchases with the current value of any Class A shares you purchased previously for (i) your account, (ii) your spouse's account, (iii) a joint account with your spouse, or (iv) your minor children's trust or
custodial accounts. In calculating the total amount of purchases, you may include in your letter purchases made up to 90 days before the date of the Letter of Intent. A fiduciary purchasing shares for the same fiduciary account, trust or estate may
also consider the value of Class A shares purchased previously that were sold subject to a sales charge. In other words, a Letter of Intent allows you to purchase Class A shares of the Fund over a 13-month period and receive the same sales charge as
if you had purchased all the shares at the same time. The Fund will also consider the value of Class A shares sold at NAV. Class A shares purchased with dividends or distributions will not be included in the calculation. To be entitled to a reduced
sales charge on the purchase of Class A shares based on shares you intend to purchase over the 13-month period, you must send the Fund a Letter of Intent. The 13-month period begins on the date of the first purchase, including those purchases made
in the 90-day period before the date of the Letter of Intent. Please note that the purchase price of these prior purchases will not be adjusted.
Prospectus 12
You are not legally bound by the terms of your Letter of Intent to purchase the amount of shares stated in the Letter of Intent. The Letter of Intent does, however, authorize the Fund to hold in escrow 5.00% of the total amount you intend to purchase. If you do not complete the total intended purchase of Class A shares at the end of the 13-month period, the Fund's transfer agent will redeem the necessary portion of the escrowed shares to make up the difference between the reduced sales charge rate (based on the amount you intended to purchase) and the sales charge rate that would normally apply (based on the actual amount you purchased).
Additional information regarding the reduction of Class A sales charges is available in the Fund’s Statement of Additional Information. To take advantage of the Right of Accumulation and/or a Letter of Intent, contact the Fund or your financial intermediary. To determine if you are eligible for these programs or to request a copy of the Statement of Additional Information, call 1-877-385-2720 between the hours of 8:30 a.m. and 6:00 p.m. Eastern Time on days the Funds are open for business. These programs may be terminated or amended at any time.
Class C Shares
Class C shares of the Fund are offered at their NAV without an initial sales charge. This means that 100% of your initial investment is invested in shares of the Fund. However, Class C shares purchased before August 1, 2013 are subject to a contingent deferred sales charge (“CDSC”) (based on the lower of the initial investment amount and the current NAV) of 1% if redeemed within one year of the purchase date. No CDSC will be charged if you redeem your shares after one year of the purchase date. The holding period for the CDSC begins on the day you buy your shares. Your shares will age one month on the same date the next month and each following month. In determining whether the CDSC applies to a redemption of C shares, C shares not subject to a CDSC are redeemed first.
Sales Charge Waivers
Sales charges may be waived and no sales charge is imposed on Class A shares of the Fund if the shares were:
1. Bought by officers, directors or trustees, and employees and their immediate family members (i.e., spouses, children, grandchildren, parents, grandparents and any dependent of the person, as defined in section 152 of the Internal Revenue Code) of:
• Neiman Funds;
• Neiman Funds Management LLC and its subsidiaries and affiliates;
• The Distributor and its subsidiaries and affiliates; or
• Broker-dealers or financial institutions that have entered into dealer agreements with the Funds or their principal underwriter and their subsidiaries and affiliates (or otherwise have an arrangement with a broker-dealer or financial institution with respect to sales of Fund shares).
2. Bought by advisory clients of Neiman Funds Management LLC and its subsidiaries and affiliates.
3. Bought by certain retirement and deferred compensation plans, and trusts used to fund those plans, including, but not limited to, those plans qualified under sections 401(k), 403(b) or 457 of the Internal Revenue Code and “rabbi trusts.”
4. Bought by financial intermediaries who have a dealer arrangement with the Distributor, who place trades for their own accounts or for the accounts of their clients and who charge a management, asset allocation, consulting or other fee for their services, or clients of such financial intermediaries who place trades for their own accounts if the accounts are linked to the master account of such financial intermediary.
5. Bought by an investment adviser, broker-dealer or financial planner, provided arrangements are pre-approved.
Prospectus 13
6. Bought by a bank, trust company or thrift institution which is acting as a fiduciary exercising investment discretion, provided that appropriate notification of such a fiduciary relationship is reported at the time of the investment to the Fund or the Fund's Distributor.
7. Bought by employer-sponsored health savings accounts.
8. Bought with proceeds from the sale of Class A shares of the Fund, but only if the purchase is made within 90 days of the sale or distribution. Appropriate documentation may be required. Exercising the reinvestment privilege will not affect the character of any gain or loss realized on the redemption for federal income tax purposes, except that if the redemptions resulted in a loss, the reinvestment may result in the loss being disallowed under the “wash sale” rules.
9. Bought in connection with plans of reorganizations of the Fund, such as mergers, asset acquisitions and exchange offers to which the Fund is a party.
10. Bought by a “charitable organization” as defined for purposes of Section 501(c)(3) of the Internal Revenue Code, or by a charitable remainder trust or life income pool established for the benefit of a charitable organization.
To take advantage of any of these sales charge waivers, you must qualify for such waiver. To see if you qualify, call 1-877-385-2720 between the hours of 8:00 a.m. and 6:00 p.m. Eastern Time on days the Funds are open for business or contact your financial intermediary. These waivers may not continue indefinitely and may be discontinued at any time without notice.
Rule 12b-1 Fees
The Fund has adopted a Distribution Plan under Rule 12b-1 that allows it to pay distribution and other fees for the sale and distribution of its shares and for services provided to shareholders. These fees are called “Rule 12b-1 fees.” Rule 12b-1 fees are paid by the Fund to the Distributor as compensation for its services and expenses in connection with the distribution of Fund shares. The Distributor may pay any or all amounts received under the Rule 12b-1 Plan to other persons, including the Adviser, for any distribution, promotional or shareholder support services. The Class A shares pay an annual Rule 12b-1 fee equal to 0.25% of its average daily net assets. Up to 0.25% of the 12b-1 fee may be used as a shareholder servicing fee. Class C shares pay an annual Rule 12b-1 fee equal to 1.00% of its average daily net assets, of which 0.75% is an asset based sales charge and 0.25% is a service fee. Because these fees are paid out of the Fund's assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
Minimum Investments (Class A Shares and Class C Shares)
|
|
|
Initial
|
|
Additional
|
|
|
Regular Account
|
$
|
2,500
|
|
$100
|
|
|
Automatic Investment Plan
|
$
|
1,000
|
|
$100
|
*
|
|
IRA Account
|
$
|
1,000
|
|
$100
|
|
*An Automatic Investment Plan requires a $100 minimum automatic monthly or quarterly investment.
All purchases must be made in U.S. dollars and checks must be drawn on U.S. banks. No cash, money orders, travelers checks, credit cards, credit card checks, third party checks or other checks deemed to be high-risk checks will be accepted. A $20 fee will be charged against your account for any payment check returned to the transfer agent or for any incomplete electronic fund transfer, or for insufficient funds, stop payment, closed account or other reasons. If a check does not clear your bank or the Fund is unable to debit your predesignated bank account on the day of purchase, the Fund reserves the right to cancel the purchase. If your purchase is canceled, you will be responsible for any losses or fees imposed by your bank and losses that may be incurred as a result of a decline in the value of the canceled purchase. The Fund (or Fund agent) has the authority to redeem shares
in your account(s) to cover any losses due to fluctuations in share price. Any profit on such cancellation will accrue to the Fund. Your investment in the Fund should be intended to serve as a long-term investment vehicle. The Fund is not designed to provide you with a means of speculating on the short-term fluctuations in the stock market. The Fund reserves the right to reject any purchase request that it regards as disruptive to the efficient management of the Fund, which includes investors with a history of excessive trading. The Fund also reserves the right to stop offering shares at any time.
Types of Account Ownership
You can establish the following types of accounts by completing a Shareholder Account Application:
•
Individual or Joint Ownership
Individual accounts are owned by one person. Joint accounts have two or more owners.
•
A Gift or Transfer to Minor
(UGMA or UTMA)
A UGMA/UTMA account is a custodial account managed for the benefit of a minor. To open an UGMA or UTMA account, you must include the minor’s social security number on the application.
•
Trust
An established trust can open an account. The names of each trustee, the name of the trust and the date of the trust agreement must be included on the application.
•
Business Accounts
Corporation and partnerships may also open an account. The application must be signed by an authorized officer of the corporation or a general partner of a partnership.
•
IRA Accounts
See “Tax-Deferred Plans” on page 16.
Instructions For Opening and Adding to an Account
TO OPEN AN ACCOUNT
By Mail
Complete and sign the Shareholder Application or an IRA Application
Make your check payable to Neiman Balanced Allocation Fund • For IRA accounts, please specify the year for which the contribution is made.
Mail the application and check to:
Neiman Balanced Allocation Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
|
TO ADD TO AN ACCOUNT
By Mail
Complete the investment slip that is included with your account statement, and write your account number on your check. If you no longer have your investment slip, please reference your name, account number, and address on your check.
Mail the slip and the check to:
Neiman Balanced Allocation Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
|
Prospectus 15
By overnight courier, send to:
Neiman Balanced Allocation Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
|
TO OPEN AN ACCOUNT
By Wire
Call 1-877-385-2720 for instructions and and to obtain an investor account number or an IRA account number prior to wiring to the Fund.
TO ADD TO AN ACCOUNT
By Wire
Call 1-877-385-2720 for instructions.
Telephone and Wire Transactions
With respect to all transactions made by telephone, the Fund and its transfer agent will employ reasonable procedures to confirm that instructions communicated by telephone are genuine. Such procedures may include, among others, requiring some form of personal identification prior to acting upon telephone instructions, providing written confirmation of all such transactions, and/or tape recording all telephone instructions. If reasonable procedures are followed, then neither the Fund nor the transfer agent will be liable for any loss, cost, or expense for acting upon an investor's telephone instructions or for any unauthorized telephone redemption. In any instance where the Fund’s transfer agent is not reasonably satisfied that instructions received by telephone are genuine, neither the Fund nor the transfer agent shall be liable for any losses which may occur because of delay in implementing a transaction.
If you purchase your initial shares by wire, the transfer agent first must have received a completed account application and issued an account number to you. The account number must be included in the wiring instructions as set forth on the previous page. The transfer agent must receive your account application to establish shareholder privileges and to verify your account information. Payment of redemption proceeds may be delayed and taxes may be withheld unless the Fund receives a properly completed and executed account application.
Shares purchased by wire will be purchased at the NAV next determined after the transfer agent receives your wired funds and all required information is provided in the wire instructions. If the wire is not received by 4:00 p.m. Eastern time, the purchase will be effective at the NAV next calculated after receipt of the wire.
Tax-Deferred Plans
If you are eligible, you may set up one or more tax-deferred accounts. A tax-deferred account allows you to shelter your investment income and capital gains from current income taxes. A contribution to certain of these plans may also be tax deductible. Tax-deferred accounts include retirement plans described below. Distributions from these plans are generally subject to an additional tax if withdrawn prior to age 59 1/2 or used for a nonqualifying purpose. Investors should consult their tax adviser or legal counsel before selecting a tax-deferred account.
US Bank N.A.
, serves as the custodian for the tax-deferred accounts offered by the Fund. You will be charged an annual account maintenance fee of $8 for each tax-deferred account you have with the Fund. You may pay the fee by check or have it automatically deducted from your account (usually in December). The custodian reserves the right to change the amount of the fee or to waive it in whole or part for certain types of accounts.
Prospectus 16
Types of Tax-Deferred Accounts
• Traditional IRA
An individual retirement account. Your contribution may or may not be deductible depending on your circumstances. Assets can grow tax-deferred and distributions are taxable as income.
• Roth IRA
An IRA with non-deductible contributions, tax-free growth of assets, and tax-free distributions for qualified distributions.
• Spousal IRA
An IRA funded by a working spouse in the name of a non-earning spouse.
• SEP-IRA
An individual retirement account funded by employer contributions. Your assets grow tax-deferred and distributions are taxable as income.
• Keogh or Profit Sharing Plans
These plans allow corporations, partnerships and individuals who are self-employed to make tax-deductible contributions of up to $35,000 for each person covered by the plans.
• 403(b) Plans
An arrangement that allows employers of charitable or educational organizations to make voluntary salary reduction contributions to a tax-deferred account.
• 401(k) Plans
Allows employees of corporations of all sizes to contribute a percentage of their wages on a tax-deferred basis. These accounts need to be established by the trustee of the plan.
Automatic Investment Plans
By completing the Automatic Investment Plan section of the account application, you may make automatic monthly or quarterly investments ($100 minimum per purchase) in the Fund from your bank or savings account. Your initial
investment minimum is $250 if you select this option. Shares of the Fund may also be purchased through direct deposit plans offered by certain employers and government agencies. These plans enable a shareholder to have all or a portion of his or
her payroll or Social Security checks transferred automatically to purchase shares of the Fund.
FOR INVESTING
Automatic Investment Plan
For making automatic investments from a designated bank account.
Payroll Direct Deposit Plan
For making automatic investments from your payroll check.
Dividend Reinvestment
All income dividends and capital gains distributions will be automatically reinvested in shares of the Fund unless you indicate otherwise on the account application or in writing.
Prospectus 17
Instructions For Selling Fund Shares
You may sell all or part of your shares on any day that the New York Stock Exchange is open for trading. Your shares will be sold at the next NAV per share calculated after your order is received in proper form by the transfer agent. The proceeds of your sale may be more or less than the purchase price of your shares, depending on the market value of the Fund's securities at the time of your sale. Your order will be processed promptly and you will generally receive the proceeds within seven days after receiving your properly completed request. The Fund will not mail any proceeds unless your investment check has cleared the bank, which may take up to fifteen calendar days. This procedure is intended to protect the Fund and its shareholders from loss. If the dollar or share amount requested is greater than the current value of your account, your entire account balanced will be redeemed. If you choose to redeem your account in full, any automatic services currently in effect for the account will be terminated unless you indicate otherwise in writing.
TO SELL SHARES
By Mail
Write a letter of instruction that includes:
-
The names(s) and signature(s) of all account owners.
-
Your account number.
-
The dollar or share amount you want to sell.
-
Where to send the proceeds.
-
If redeeming from your IRA, please note applicable withholding requirements.
-
Obtain a signature guarantee or other documentation, if required.
Mail your request to:
Neiman Balanced Allocation Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
|
By overnight courier, send to:
Neiman Balanced Allocation Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
|
By Telephone
-
You will automatically be granted
telephone redemption privileges
unless you decline them in writing
or indicate on the appropriate sec
tion of the account application that
you decline this option. Otherwise,
you may redeem Fund shares by
calling 1-877-385-2720. Redemption
proceeds will only be mailed to your
address of record.
-
You may only redeem a maximum of
$25,000 per day by telephone.
-
You will not be able to redeem by
telephone and have a check sent to
your address of record for a period of
15 days following an address change.
-
Unless you decline telephone
privileges in writing or on your
account application, as long as the
Fund takes reasonable measures to
verify the order, you may be respon-
sible for any fraudulent telephone order.
For specific information on how to redeem your account, and to determine if a signature guarantee or other documentation is required, please call toll-free in the U.S.1-877-385-2720.
Prospectus 18
Additional Redemption Information
Signature Guarantees
Signature guarantees are designed to protect both you and the Fund from fraud. A signature guarantee of each owner is required to redeem shares in the following situations:
-
If you change ownership on your account.
-
If a change of address request has been received by the transfer agent within the last 15 days.
-
If you wish to redeem $25,000 or more from any shareholder account.
Signature guarantees can be obtained from most banks, savings and loan associations, trust companies, credit unions, broker/dealers, and member firms of a national securities exchange. Call your financial institution to see if
they have the ability to guarantee a signature.
A notary public cannot provide signature guarantees.
The Fund reserves the right to require a signature guarantee under other circumstances or to delay a redemption when permitted by Federal Law. For more information pertaining to signature guarantees, please call
1-877-385-2720.
Corporate, Trust and Other Accounts
Redemption requests from corporate, trusts, and other accounts may require documents in addition to those described above, evidencing the authority of the officers, trustees or others. In order to avoid delays in processing
redemption requests for these accounts, you should call the transfer agent at 1-877-385-2720 to determine what additional documents are required.
Address Changes
To change the address on your account, call the transfer agent at 1-877-385-2720 or send a written request signed by all account owners. Include the account number(s) and name(s) on the account and both the old and new
addresses. Certain options may be suspended for a period of 15 days following an address change.
Transfer of Ownership
In order to change the account registration or transfer ownership of an account, additional documents will be required. In order to avoid delays in processing these requests, you should call the transfer agent at 1-877-385-2720
to determine what additional documents are required.
Redemption Initiated by the Fund
Because there are certain fixed costs involved with maintaining your account, the Fund may require you to redeem all of your shares if your account balance falls below $500. After your account balance falls below the
minimum balance, you will receive a notification from the Fund indicating its intent to close your account along with instructions on how to increase the value of your account to the minimum amount within 60 days. If your account balance is still
below $500 after 60 days, the Fund may close your account and send you the proceeds. This minimum balance requirement does not apply to accounts using automatic investment plans, to IRAs, and to other tax-sheltered investment accounts. The right
of redemption by the Fund will not apply if the value of your account balance falls below $500 because of market performance. All shares of the Fund are also subject to involuntary redemption if the Board of Trustees determines to liquidate the
Fund. Any involuntary redemption will create a capital gain or loss, which may have tax consequences about which you should consult your tax adviser.
Prospectus 19
Shareholder Communications
Account Statements
Every quarter, shareholders of the Fund will automatically receive regular account statements. You will also be sent a yearly statement detailing the tax characteristics of any dividends and distributions you have
received.
Confirmations
Confirmation statements will be sent after each transaction that affects your account balance or account registration.
Regulatory Mailings
Financial reports will be sent at least semiannually. Annual reports will include audited financial statements. To reduce expenses, one copy of each report will be mailed to each taxpayer identification number even though the
investor may have more than one account in the Fund.
Dividends and Distributions
The Fund intends to pay distributions on an annual basis and expects that distributions will consist primarily of capital gains. You may elect to reinvest income dividends and capital gain distributions in the form of
additional shares of the Fund or receive these distributions in cash. Dividends and distributions from the Fund are automatically reinvested in the Fund, unless you elect to have dividends paid in cash. Reinvested dividends and distributions receive
the same tax treatment as those paid in cash. If you are interested in changing your election, you may call the transfer agent at 1-877-385-2720 or send a written notification to:
Neiman Balanced Allocation Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
Market Timing
|
The Fund discourages market timing. Market timing is an investment strategy using frequent purchases, redemptions and/or exchanges in an attempt to profit from short term market movements. Market timing may result in dilution
of the value of Fund shares held by long term shareholders, disrupt portfolio management and increase Fund expenses for all shareholders. The Board of Trustees has adopted a policy directing the Fund to reject any purchase order with respect to one
investor, a related group of investors or their agent(s), where it detects a pattern of purchases and sales of the Fund that indicates market timing or trading that it determines is abusive. This policy generally applies to all Fund shareholders.
While the Fund attempts to deter market timing, there is no assurance that it will be able to identify and eliminate all market timers. For example, certain accounts called “omnibus accounts” include multiple shareholders. Omnibus accounts
typically provide the Fund with a net purchase or redemption request on any given day where purchasers of Fund shares and redeemers of Fund shares are netted against one another and the identity of individual purchasers and redeemers whose orders
are aggregated are not known by the Fund. The netting effect often makes it more difficult for the Fund to detect market timing, and there can be no assurance that the Fund will be able to do so.
Taxes
Fund dividends and distributions are taxable to most investors (unless your investment is in an IRA or other tax-advantaged account). Dividends paid by the Fund out of net ordinary income and distributions of net short-term
capital gains are taxable to the shareholders as ordinary income.
Prospectus 20
Distributions by the Fund of net long-term capital gains to shareholders are generally taxable to the shareholders at the applicable long-term capital gains rate, regardless of how long the shareholder has held shares of the Fund.
Redemptions of shares of the Fund are taxable events which you may realize as a gain or loss. The amount of the gain or loss and the rate of tax will depend mainly upon the amount paid for the shares, the amount received from the sale, and how long the shares were held.
The Fund’s distributions may be subject to federal income tax whether received in cash or reinvested in additional shares. In addition to federal taxes, you may be subject to state and local taxes on distributions.
For taxable years beginning after December 31, 2012, an additional 3.8% Medicare tax may be imposed on distributions you receive from the Fund and on gains from selling, redeeming or exchanging your shares.
Because everyone’s tax situation is unique, always consult your tax professional about federal, state, and local tax consequences of an investment in the Fund.
Other Fund Service Providers
Custodian
US Bank N.A.
Distributor
Rafferty Capital Markets, LLC
Fund Administrator
Premier Fund Solutions, Inc.
Independent Registered Public Accounting Firm
Cohen Fund Audit Services, Ltd.
Investment Adviser
Neiman Funds Management LLC
Legal Counsel
Thompson Hine LLP
Transfer Agent
Mutual Shareholder Services, LLC
Prospectus 21
The following is a description of the Fund's policies regarding disclosure of nonpublic personal information that you provide to the Fund or that the Fund collects from other sources. In the event that you hold shares of the Fund through a broker-dealer or other financial intermediary, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared with unaffiliated third parties.
Categories of Information the Fund Collects
. The Fund collects the following nonpub-lic personal information about you:
• Information the Fund receives from you on or in applications or other forms, correspondence, or conversations (such as your name, address, phone number, social security number, assets, income and date of birth); and
• Information about your transactions with the Fund, its affiliates, or others (such as your account number and balance, payment history, parties to transactions, cost basis information, and other financial information).
Categories of Information the Fund Discloses
. The Fund does not disclose any non-public personal information about their current or former shareholders to unaffiliated third parties, except as required or permitted by law. The Fund is permitted by law to disclose all of the information it collects, as described above, to their service providers (such as the Fund’s custodian, administrator and transfer agent) to process your transactions and otherwise provide services to you.
Confidentiality and Security
. The Fund restricts access to your nonpublic personal information to those persons who require such information to provide products or services to you. The Fund maintains physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Financial Highlights
The financial highlights table on the following page is intended to help you understand the Fund's financial performance since inception. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate you would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Cohen Fund Audit Services, Ltd., the Fund’s independent registered public accounting firm, whose report, along with the Fund's financial statements, are included in the Fund's annual report, which is available upon request and incorporated by reference in the Statement of Additional Information.
Prospectus 22
|
Financial Highlights - Class A
|
|
|
|
|
|
|
|
|
|
|
Selected data for a share outstanding throughout the period:
|
|
4/1/2012
|
|
|
4/1/2011
|
|
|
7/6/2010*
|
|
|
|
|
to
|
|
|
to
|
|
|
to
|
|
|
|
|
3/31/2013
|
|
|
3/31/2012
|
|
|
3/31/2011
|
|
|
Net Asset Value -
|
|
|
|
|
|
|
|
|
|
|
Beginning of Period
|
$
|
11.42
|
|
$
|
11.46
|
|
$
|
10.00
|
|
|
Net Investment Income (Loss)
(a)
|
|
0.13
|
|
|
0.08
|
|
|
0.03
|
|
|
Net Gains or Losses on Securities
|
|
|
|
|
|
|
|
|
|
|
(realized and unrealized)
|
|
0.85
|
|
|
0.01
|
|
|
1.47
|
|
|
Total from Investment Operations
|
|
0.98
|
|
|
0.09
|
|
|
1.50
|
|
|
|
|
Distributions (From Net Investment Income)
|
|
(0.14
|
)
|
|
(0.02
|
)
|
|
(0.02
|
)
|
|
Distributions (From Capital Gains)
|
|
0.00
|
|
|
(0.11
|
)
|
|
(0.02
|
)
|
|
Total Distributions
|
|
(0.14
|
)
|
|
(0.13
|
)
|
|
(0.04
|
)
|
|
Net Asset Value -
|
|
|
|
|
|
|
|
|
|
|
End of Period
|
$
|
12.26
|
|
$
|
11.42
|
|
$
|
11.46
|
|
|
Total Return
(b)
|
|
8.62
|
%
|
|
0.90
|
%
|
|
14.99
|
% ***
(d)
|
|
Ratios/Supplemental Data
|
|
|
|
|
|
|
|
|
|
|
Net Assets - End of Period (Thousands)
|
$
|
9,710
|
|
$
|
7,292
|
|
$
|
5,116
|
|
|
Before Waiver/Reimbursement
|
|
|
|
|
|
|
|
|
|
|
Ratio of Expenses to Average Net Assets
(e)
|
|
2.08
|
%
|
|
2.40
|
%
|
|
4.04
|
% **
|
|
Ratio of Net Investment Income (Loss) to Average Net Assets
(e)
(f)
|
|
0.53
|
%
|
|
-0.22
|
%
|
|
-2.22
|
% **
|
|
After Waiver/Reimbursement
|
|
|
|
|
|
|
|
|
|
|
Ratio of Expenses to Average Net Assets
(e)
|
|
1.45
|
%
|
|
1.45
|
%
|
|
1.45
|
% **
|
|
Ratio of Net Investment Income (Loss) to Average Net Assets
(e)
(f)
|
|
1.16
|
%
|
|
0.72
|
%
|
|
0.37
|
% **
|
|
Portfolio Turnover Rate
|
|
63.16
|
%
|
|
65.19
|
%
|
|
53.13
|
% ***
|
|
|
|
Financial Highlights - Class C
|
|
|
|
|
|
|
|
|
|
|
Selected data for a share outstanding throughout the period:
|
|
4/1/2012
|
|
|
4/1/2011
|
|
|
7/6/2010*
|
|
|
|
|
to
|
|
|
to
|
|
|
to
|
|
|
|
|
3/31/2013
|
|
|
3/31/2012
|
|
|
3/31/2011
|
|
|
Net Asset Value -
|
|
|
|
|
|
|
|
|
|
|
Beginning of Period
|
$
|
11.28
|
|
$
|
11.42
|
|
$
|
10.00
|
|
|
Net Investment Income (Loss)
(a)
|
|
0.04
|
|
|
0.00
|
(c)
|
|
(0.03
|
)
|
|
Net Gains or Losses on Securities
|
|
|
|
|
|
|
|
|
|
|
(realized and unrealized)
|
|
0.84
|
|
|
(0.01
|
)
|
|
1.47
|
|
|
Total from Investment Operations
|
|
0.88
|
|
|
(0.01
|
)
|
|
1.44
|
|
|
|
|
Distributions (From Net Investment Income)
|
|
(0.04
|
)
|
|
(0.02
|
)
|
|
0.00
|
(c)
|
|
Distributions (From Capital Gains)
|
|
0.00
|
|
|
(0.11
|
)
|
|
(0.02
|
)
|
|
Total Distributions
|
|
(0.04
|
)
|
|
(0.13
|
)
|
|
(0.02
|
)
|
|
Net Asset Value -
|
|
|
|
|
|
|
|
|
|
|
End of Period
|
$
|
12.12
|
|
$
|
11.28
|
|
$
|
11.42
|
|
|
Total Return
(b)
|
|
7.84
|
%
|
|
(0.01
|
)%
|
|
14.53
|
% ***
(d)
|
|
Ratios/Supplemental Data
|
|
|
|
|
|
|
|
|
|
|
Net Assets - End of Period (Thousands)
|
$
|
6,481
|
|
$
|
6,879
|
|
$
|
4,272
|
|
|
Before Waiver/Reimbursement
|
|
|
|
|
|
|
|
|
|
|
Ratio of Expenses to Average Net Assets
(e)
|
|
2.83
|
%
|
|
3.15
|
%
|
|
4.79
|
% **
|
|
Ratio of Net Investment Income (Loss) to Average Net Assets
(e)
(f)
|
|
-0.33
|
%
|
|
-0.96
|
%
|
|
-2.94
|
% **
|
|
After Waiver/Reimbursement
|
|
|
|
|
|
|
|
|
|
|
Ratio of Expenses to Average Net Assets
(e)
|
|
2.20
|
%
|
|
2.20
|
%
|
|
2.20
|
% **
|
|
Ratio of Net Investment Income (Loss) to Average Net Assets
(e)
(f)
|
|
0.31
|
%
|
|
-0.01
|
%
|
|
-0.35
|
% **
|
|
Portfolio Turnover Rate
|
|
63.16
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%
|
|
65.19
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%
|
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53.13
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% ***
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* The Fund commenced operations on July 6, 2010. ** Annualized. *** Not Annualized.
(a) Based on Average Shares Outstanding. (b) 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.
(c) Amount calculated is less than $0.005. (d) Represents performance beginning on the first day of
security trading (July 16, 2010). (e) These ratios exclude the impact of expenses of the under-
lying security holdings listed in the Schedule of Investments.
(f) Recognition of net investment income by the Fund is affected by the timing of the declaration of divi-
dends by the underlying investment companies in which the Fund invests.
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Prospectus 23
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Prospectus 24
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Prospectus 25
Where To Go For Information
For shareholder inquiries, please call toll-free in the U.S. at 1-877-385-2720.
You will also find more information about the Fund on our website at www.neimanfunds.com or in the following documents:
Statement of Additional Information
The Statement of Additional Information contains additional and more detailed information about the Fund, and is considered to be a part of this Prospectus. Additional information about the Fund's investments is available in the Fund's annual and semi-annual reports to shareholders. In the Fund's annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.
There are three ways to get a copy of these documents.
1. Call or write for one, and a copy will be sent without charge.
Neiman Balanced Allocation Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
1-877-385-2720
www.neimanfunds.com
2. Call or write the Public Reference Section of the Securities and Exchange Commission
(“SEC”) and ask them to mail you a copy. The SEC charges a fee for this service. You can
also review and copy information about the Fund in person at the SEC Public Reference
Room in Washington D.C.
Public Reference Section of the SEC
Washington D.C. 20549-0102
1-202-551-8090
Copies of these documents may also be obtained, after paying a duplication fee, by elec-
tronic request at the following e-mail address: publicinfo@sec.gov
3. Go to the SEC's website (www.sec.gov) and download a text-only version.
|
|
Neiman Funds SEC file number 811-21290
|
No dealer, salesman, or other person has been authorized to give any information or to make any representations, other than those contained in this Prospectus, and, if given or made, such other information or representations must not be relied upon as having been authorized by the Funds or the Adviser. This Prospectus does not constitute an offering in any state in which such offering may not lawfully be made.
Neiman Funds
6631 Main Street
Williamsville, NY 14221
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NEIMAN BALANCED ALLOCATION FUND
Class A Shares (NBAFX)
Class C Shares (NBCFX)
STATEMENT OF ADDITIONAL INFORMATION
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This Statement of Additional Information (“SAI”) is not a prospectus. It should be read in conjunction with the Prospectus of the Neiman Balanced Allocation Fund dated August 1, 2013. The Fund’s Annual Report to Shareholders, as filed with the Securities and Exchange Commission on June 5, 2013, has been incorporated by reference into this SAI. A free copy of the Prospectus or Annual Report can be obtained by writing the Transfer Agent at 8000 Town Centre Drive, Suite 400, Broadview Heights, OH 44147 or by calling 1-877-385-2720.
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TABLE OF CONTENTS
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|
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DESCRIPTION OF THE TRUST AND THE FUND
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1
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ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
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1
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INVESTMENT LIMITATIONS
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6
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THE INVESTMENT ADVISER
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7
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THE PORTFOLIO MANAGERS
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8
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TRUSTEES AND OFFICERS
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9
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BOARD INTEREST IN THE FUND
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12
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COMPENSATION
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13
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CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
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13
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AUDIT COMMITTEE
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13
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PORTFOLIO TRANSACTIONS AND BROKERAGE
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14
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ADDITIONAL TAX INFORMATION
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15
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PRICING OF FUND SHARES
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17
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SHARES OF THE FUND
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17
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DISTRIBUTION PLAN
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20
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PURCHASE AND SALES THROUGH BROKER DEALERS
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22
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ANTI-MONEY LAUNDERING PROGRAM
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22
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CUSTODIAN
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23
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FUND SERVICES
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23
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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23
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DISTRIBUTOR
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23
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DISCLOSURE OF PORTFOLIO HOLDINGS
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23
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FINANCIAL STATEMENTS
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24
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PROXY VOTING STATEMENT
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24
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-i-
DESCRIPTION OF THE TRUST AND THE FUND
The Neiman Balanced Allocation Fund (the “Fund”) was organized as a non-diversified series of Neiman Funds (the “Trust”) on May 26, 2010 and commenced operations on July 6, 2010. The Trust is an
open-end investment company established under the laws of Ohio by an Agreement and Declaration of Trust dated January 3, 2003 (the “Trust Agreement”) consisting of three series. The Trust Agreement permits the Trustees to issue an
unlimited number of shares of beneficial interest of separate series without par value. The investment adviser to the Fund is Neiman Funds Management LLC (the “Adviser”).
The Fund does not issue share certificates. All shares are held in non-certificate form registered on the books of the Fund and the Fund's transfer agent for the account of the shareholder. Each share of a series
represents an equal proportionate interest in the assets and liabilities belonging to the applicable class of the series with each other share of that series and is entitled to such dividends and distributions out of income belonging to the
applicable class of the series as are declared by the Trustees. The shares do not have cumulative voting rights or any preemptive or conversion rights, and the Trustees have the authority from time to time to divide or combine the shares of any
series into a greater or lesser number of shares of that series so long as the proportionate beneficial interest in the assets belonging to that series and the rights of shares of any other series are in no way affected. In case of any liquidation
of a series, the holders of shares of the series being liquidated will be entitled to receive as a class a distribution out of the assets, net of the liabilities, belonging to that series. Expenses attributable to any series or class are borne by
that series or class, and thus net asset values per share of the class may differ. Any general expenses of the Trust not readily identifiable as belonging to a particular series are allocated by or under the direction of the Trustees in such manner
as the Trustees determine to be fair and equitable. No shareholder is liable to further calls or to assessment by the Trust without his or her express consent.
For information concerning the purchase and redemption of shares of the Fund, see “How to Buy Shares and Sell Shares” in the Prospectus. For a description of the methods used to determine the share price and
value of the Fund's assets, see “Pricing of Fund Shares” in the Prospectus and “Pricing of Fund Shares” in this Statement of Additional Information.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a discussion of some of the investments the Fund may make and some of the techniques it may use.
A. Investment Company Securities. The Fund invests primarily in the securities of other investment companies to the extent that such an investment would be consistent with the requirements of the Investment Company Act
of 1940, as amended and the Fund's investment objectives. Investments in the securities of other investment companies (also referred to as “funds”) may involve duplication of advisory fees and certain other expenses. By investing in
another fund, the Fund becomes a shareholder of that investment company. As a result, the Fund's shareholders indirectly will bear the Fund's proportionate share of the fees and expenses paid by shareholders of the other investment company, in
addition to the fees and expenses the Fund's shareholders directly bear in connection with the Fund's own operations.
Under Section 12(d)(1) of the Investment Company Act of 1940, as amended, a fund may invest only up to 5% of its total assets in the securities of any one investment company, and may not own more than 3% of the
outstanding voting stock of any one investment company (the “3% Limitation”) or invest more than 10% of its total assets in the securities of other investment companies. However, Section 12(d)(1)(F) of the Investment Company Act of 1940,
as amended, provides that the provisions of paragraph 12(d)(1) shall not apply to securities purchased or otherwise acquired by a fund if (i) immediately after such purchase or acquisition not more than 3% of the total outstanding stock of such
registered investment company is owned by the fund and all affiliated persons of the fund; and (ii) the fund has not offered or sold after January 1, 1971, and is not proposing to offer or sell any security issued by it through a principal
underwriter or otherwise at a public or offering price which includes a sales load of more than ½%. In the alternative, the Fund may rely on Rule 12d1-3, which allows unaffiliated mutual funds to exceed the 5% limitation and the 10%
limitation, provided the aggregate sales loads any investor pays (i.e., the combined distribution expenses of both the acquiring fund and the acquired funds) does not exceed the limits on sales loads established by the FINRA for funds of funds.
1
An investment company that issues shares to a fund pursuant to paragraph 12(d)(1)(F) is not required to redeem its shares in an amount exceeding 1% of such investment company’s total outstanding shares in any
period of less than thirty days. When the Fund exercises voting rights, by proxy or otherwise, with respect to investment companies owned by the Fund, the Fund will either seek instruction from shareholders with regard to the voting of all proxies
and vote in accordance with such instructions, or vote the shares held by the Fund in the same proportion as the vote of all other holders of such security.
The Fund and the other investment companies in which the Fund invests also may invest in the following securities and/or use the following investment techniques.
B. Equity Securities. The Fund may invest in equity securities such as common stock, convertible preferred stock, convertible bonds, rights and warrants. Common stocks, the most familiar type, represent an equity
(ownership) interest in a corporation. Warrants are options to purchase equity securities at a specified price for a specific time period. Rights are similar to warrants, but normally have a short duration and are distributed by the issuer to its
shareholders. Although equity securities have a history of long term growth in value, their prices fluctuate based on changes in a company's financial condition and on overall market and economic conditions.
Equity securities also include SPDRs (S&P Depositary Receipts, known as “Spiders”), DIAMONDS, QQQQs and a number of other exchange traded funds. SPDRs represent ownership in the SPDR Trust, a unit
investment trust that holds a portfolio of common stocks that closely tracks the price performance and dividend yield of the S&P 500 Composite Price Index. SPDRs trade on the American Stock Exchange under the symbol SPY. A MidCap SPDR is similar
to a SPDR except that it tracks the performance of the S&P MidCap 400 Index and trades on the American Stock Exchange under the symbol MDY. DIAMONDS represent ownership in the DIAMONDS Trust, a unit investment trust that serves as an index to
the Dow Jones Industrial Average (the “Dow”) in that its holding consists of the 30 component stocks of the Dow. DIAMONDS trade on the American Stock Exchange under the symbol DIA. QQQQs (PowerShares QQQ) represent ownership in the
NASDAQ-100 Trust, a unit investment trust that attempts to closely track the price and yield performance of the NASDAQ 100 Index by holding shares of all the companies in the Index. QQQQs trade on the American Stock Exchange under the symbol QQQQ.
The Fund may also invest in a variety of other exchange traded funds, including, but not limited to, iShares, HOLDRs, Fidelity Select Portfolios, Select Sector SPDRs, Fortune e-50, Fortune 500 and streetTRACK. To the extent the Fund invests in a
sector product, the Fund is subject to the risks associated with that sector. Additionally, the Fund may invest in new exchange traded shares as they become available.
C. Options Transactions. The Fund may invest in funds and exchange traded funds that engage in option transactions involving individual securities and stock indexes. An option involves either: (a) the right or the
obligation to buy or sell a specific instrument at a specific price until the expiration date of the option; or (b) the right to receive payments or the obligation to make payments representing the difference between the closing price of a stock
index and the exercise price of the option expressed in dollars times a specified multiple until the expiration date of the option. Options are sold (written) on securities and stock indexes. The purchaser of an option on a security pays the seller
(the writer) a premium for the right granted but is not obligated to buy or sell the underlying security. The purchaser of an option on a stock index pays the seller a premium for the right granted, and in return the seller of such an option is
obligated to make the payment. A writer of an option may terminate the obligation prior to expiration of the option by making an offsetting purchase of an identical option. Options are traded on organized exchanges and in the over-the-counter
market. To cover the potential obligations involved in writing options, the Fund will either: (a) own the underlying security, or in the case of an option on a market index, will hold a portfolio of stocks substantially replicating the movement of
the index; or (b) the Fund will segregate with the custodian liquid assets sufficient to purchase the underlying security or equal to the market value of the stock index option, marked to market daily.
The purchase and writing of options requires additional skills and techniques beyond normal portfolio management, and involves certain risks. The purchase of options limits the Fund's potential loss to the amount of the
premium paid and can afford the Fund the opportunity to profit from favorable movements in the price of an underlying security to a greater extent than if transactions were effected in the security directly. However, the purchase of an option could
result in the Fund losing a greater percentage of its investment than if the transaction were effected directly. When the Fund writes a call option, it will receive a premium, but it will give up the opportunity to profit from a price increase in
the underlying security above the exercise price as long as its
2
obligation as a writer continues, and it will retain the risk of loss should the price of the security decline. When the Fund writes a put option, it will assume the risk that the price of the underlying security or instrument will fall below the
exercise price, in which case the Fund may be required to purchase the security or instrument at a higher price than the market price of the security or instrument. In addition, there can be no assurance that the Fund can effect a closing
transaction on a particular option it has written. Further, the total premium paid for any option may be lost if the Fund does not exercise the option or, in the case of over-the-counter options, the writer does not perform its obligations.
D. Foreign Securities. The Fund may invest in funds and exchange traded funds that may invest in foreign equity securities including American Depositary Receipts (“ADRs”). ADRs are certificates evidencing
ownership of shares of a foreign-based issuer held in trust by a bank or similar financial institution. They are alternatives to the direct purchase of the underlying securities in their national markets and currencies. ADRs are subject to risks
similar to those associated with direct investment in foreign securities.
Foreign investments can involve significant risks in addition to the risks inherent in U.S. investments. The value of securities denominated in or indexed to foreign currencies, and of dividends and interest from such
securities, can change significantly when foreign currencies strengthen or weaken relative to the U.S. dollar. Foreign securities markets generally have less trading volume and less liquidity than U.S. markets, and prices on some foreign markets can
be highly volatile. Many foreign countries lack uniform accounting and disclosure standards comparable to those applicable to U.S. companies, and it may be more difficult to obtain reliable information regarding an issuer’s financial condition
and operations. In addition, the costs of foreign investing, including withholding taxes, brokerage commissions, and custodial costs, generally are higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets. Foreign issuers, brokers, and securities markets may be subject to less government supervision. Foreign security trading practices, including
those involving the release of assets in advance of payment, may invoke increased risks in the event of a failed trade or the insolvency of a broker-dealer, and may involve substantial delays. It also may be difficult to enforce legal rights in
foreign countries.
Investing abroad also involves different political and economic risks. Foreign investments may be affected by actions of foreign governments adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation, restrictions on U.S. investment or on the ability to repatriate assets or convert currency into U.S. dollars, or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises. Investments in foreign countries also involve a risk of local political, economic or social instability, military action or unrest, or adverse diplomatic developments. There
is no assurance that an advisor will be able to anticipate or counter these potential events and their impacts on the Fund’s share price.
The considerations noted above generally are intensified for investments in developing countries. Developing countries may have relatively unstable governments, economies based on only a few industries and securities
markets that trade a small number of securities.
E. Short Sales. The Fund may invest in funds and exchange traded funds that may sell a security short in anticipation of a decline in the market value of the security. When the Fund engages in a short sale, it sells a
security which it does not own. To complete the transaction, the Fund must borrow the security in order to deliver it to the buyer. The Fund must replace the borrowed security by purchasing it at the market price at the time of replacement, which
may be more or less than the price at which the Fund sold the security. The Fund will incur a loss as a result of the short sale if the price of the security increases between the date of the short sale and the date on which the Fund replaces the
borrowed security. The Fund will realize a profit if the security declines in price between those dates. Any potential gain is limited to the price at which the Fund sold the security short, and any potential loss is unlimited in size.
In connection with its short sales, the Fund will be required to maintain a segregated account with the Fund's custodian of cash or liquid assets equal to (i) the current market value of the securities sold short, less
(ii) any collateral deposited with its broker (not including the proceeds from the short sales). Depending on arrangements
3
made with the broker or custodian, the Fund may not receive any payments (including interest) on collateral deposited with the broker or custodian.
F. Securities Lending. The Fund may make long and short term loans of its portfolio securities to parties such as broker-dealers, banks, or institutional investors. Securities lending allows the Fund to retain ownership
of the securities loaned and, at the same time, to earn additional income. Since there may be delays in the recovery of loaned securities, or even a loss of rights in collateral supplied, should the borrower fail financially, loans will be made only
to parties whose creditworthiness has been reviewed and deemed satisfactory by the Adviser. Furthermore, they will only be made if, in the judgment of the Adviser, the consideration to be earned from such loans would justify the risk.
The Adviser understands that it is the current view of the staff of the Securities and Exchange Commission (the “SEC”) that the Fund may engage in loan transactions only under the following conditions: (1) the
Fund must receive 100% collateral in the form of cash, cash equivalents (e.g., U.S. Treasury bills or notes) or other high grade liquid debt instruments from the borrower; (2) the borrower must increase the collateral whenever the market value of
the securities loaned (determined on a daily basis) rises above the value of the collateral; (3) after giving notice, the Fund must be able to terminate the loan at any time; (4) the Fund must receive reasonable interest on the loan or a flat fee
from the borrower, as well as amounts equivalent to any dividends, interest, or other distributions on the securities loaned and to any increase in market value; (5) the Fund may pay only reasonable custodian fees in connection with the loan; and
(6) the Board of Trustees must be able to vote proxies on the securities loaned, either by terminating the loan or by entering into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any security in which the Fund is authorized to invest. Investing this cash subjects that investment, as well as the security loaned, to market forces (i.e.,
capital appreciation or depreciation).
G. Restricted and Illiquid Securities. The portfolio of the Fund may contain illiquid securities. Illiquid securities generally include securities which cannot be disposed of promptly and in the ordinary course of
business without taking a reduced price. Securities may be illiquid due to contractual or legal restrictions on resale or lack of a ready market. The following securities are considered to be illiquid: repurchase agreements and reverse repurchase
agreements maturing in more than seven days, nonpublicly offered securities and restricted securities. Restricted securities are securities the resale of which is subject to legal or contractual restrictions. Restricted securities may be sold only
in privately negotiated transactions, in a public offering with respect to which a registration statement is in effect under the Securities Act of 1933 or pursuant to Rule 144 or Rule 144A promulgated under such Act. Where registration is required,
the Fund may be obligated to pay all or part of the registration expense, and a considerable period may elapse between the time of the decision to sell and the time such security may be sold under an effective registration statement. If during such
a period adverse market conditions were to develop, the Fund might obtain a less favorable price than the price it could have obtained when it decided to sell. The Fund will not invest more than 15% of its net assets in illiquid securities.
With respect to Rule 144A securities, these restricted securities are treated as exempt from the 15% limit on illiquid securities, provided that a dealer or institutional trading market in such securities exists. The
Fund will not, however, invest more than 10% of its net assets in Rule 144A securities. Under the supervision of the Board of Trustees, the Adviser determines the liquidity of restricted securities and, through reports from the Adviser, the Board of
Trustees will monitor trading activity in restricted securities. If institutional trading in restricted securities were to decline, the liquidity of the Fund could be adversely affected.
H. U.S. Government Securities. U.S. government securities are high-quality debt securities issued or guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S. government. Not all U.S. government
securities are backed by the full faith and credit of, or guaranteed by, the United States Treasury. For example, securities issued by the Farm Credit Banks or by the Federal National Mortgage Association (“Fannie Mae”) are supported by
the instrumentality's right to borrow money from the U.S. Treasury under certain circumstances. However, on September 7, 2008, the U.S. Treasury Department and the Federal Housing Finance Authority (the “FHFA”) announced that Fannie Mae
and The Federal Home Loan Mortgage Corporation (“Freddie Mac”) had been placed into conservatorship, a statutory process designed to stabilize a troubled institution with the objective of returning the entity to normal business operations.
The U.S. Treasury Department and the FHFA at the
4
same time established a secured lending facility and a Secured Stock Purchase Agreement with both Fannie Mae and Freddie Mac to ensure that each entity had the ability to fulfill its financial obligations. The FHFA announced that it does not
anticipate any disruption in pattern of payments or ongoing business operations of Fannie Mae or Freddie Mac. Securities issued by other agencies or instrumentalities are supported only by the credit of the entity that issued them.
I. Corporate Debt Securities. Corporate debt securities are long and short term debt obligations issued by companies (such as publicly issued and privately placed bonds, notes and commercial paper). The Adviser
considers corporate debt securities to be of investment grade quality if they are rated BBB or higher by S&P or Baa or higher by Moody's, or if unrated, determined by the Adviser to be of comparable quality. Investment grade debt securities
generally have adequate to strong protection of principal and interest payments. In the lower end of this category, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay
principal than in higher rated categories.
J. Fixed Income Securities. The Fund may invest in all types of fixed income securities, including such securities purchased on a when-issued, delayed delivery, or forward commitment basis. Fixed income securities are
subject to credit risk and interest rate risk. Credit risk is the risk that the Fund could lose money if an issuer of a fixed income security cannot meet its financial obligations or goes bankrupt. Interest rate risk is the risk that the Fund's
investments in fixed income securities may fall when interest rates rise.
Investments in high-yield bonds are considered to be more speculative than higher quality fixed income securities. They are more susceptible to credit risk than investment-grade securities, especially during periods of
economic uncertainty or economic downturns. The value of lower quality securities are subject to greater volatility and are generally more dependent on the ability of the issuer to meet interest and principal payments than higher quality securities.
Issuers of high-yield securities may not be as strong financially as those issuing bonds with higher credit ratings.
K. Financial Services Industry Obligations. The Fund may invest in each of the following obligations of the financial services industry:
(1) Certificates of Deposit. Certificates of deposit are negotiable certificates evidencing the indebtedness of a commercial bank or a savings and loan association to repay funds deposited with it for a definite period
of time (usually from fourteen days to one year) at a stated or variable interest rate.
(2) Time Deposits. Time deposits are non-negotiable deposits maintained in a banking institution or a savings and loan association for a specified period of time at a stated interest rate.
(3) Bankers' Acceptances. Bankers' acceptances are credit instruments evidencing the obligation of a bank to pay a draft which has been drawn on it by a customer, which instruments reflect the obligation both of the
bank and of the drawer to pay the face amount of the instrument upon maturity.
L. Repurchase Agreements. The Fund may invest in repurchase agreements fully collateralized by obligations issued by the U.S. government or agencies of the U.S. government (“U.S. Government Obligations”). A
repurchase agreement is a short term investment in which the purchaser (i.e., the Fund) acquires ownership of a U.S. Government Obligation (which may be of any maturity) and the seller agrees to repurchase the obligation at a future time at a set
price, thereby determining the yield during the purchaser's holding period (usually not more than 7 days from the date of purchase). Any repurchase transaction in which the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy or other default of the seller, the Fund could experience both delays in liquidating the underlying security and losses in value. However, the Fund intends to enter
into repurchase agreements only with the custodian, other banks with assets of $1 billion or more and registered securities dealers determined by the Adviser to be creditworthy. The Adviser monitors the creditworthiness of the banks and
securities dealers with which the Fund engages in repurchase transactions.
M. Borrowing. The Fund is permitted to borrow money up to one-third of the value of its total assets. Borrowing is a speculative technique that increases both investment opportunity and the Fund's ability to achieve
5
greater diversification. However, it also increases investment risk. Because the Fund's investments will fluctuate in value, whereas the interest obligations on borrowed funds may be fixed, during times of borrowing, the Fund's net asset value may
tend to increase more when its investments increase in value, and decrease more when its investments decrease in value. In addition, interest costs on borrowings may fluctuate with changing market interest rates and may partially offset or exceed
the return earned on the borrowed funds. Also, during times of borrowing under adverse market conditions, the Fund might have to sell portfolio securities to meet interest or principal payments at a time when fundamental investment considerations
would not favor such sales.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been adopted by the Trust with respect to the Fund and are fundamental (“Fundamental”), i.e, they may not be changed without the affirmative vote of
a majority of the outstanding shares of the Fund. As used in the Prospectus and the Statement of Additional Information, the term “majority” of the outstanding shares of the Fund means the lesser of: (1) 67% or more of the outstanding
shares of the Fund present at a meeting, if the holders of more than 50% of the outstanding shares of the Fund are present or represented at such meeting; or (2) more than 50% of the outstanding shares of the Fund. Other investment practices which
may be changed by the Board of Trustees without the approval of shareholders to the extent permitted by applicable law, regulation or regulatory policy are considered non-fundamental (“Non-Fundamental”).
1. Borrowing Money. The Fund will not borrow money, except: (a) from a bank, provided that immediately after such borrowing there is an asset coverage of 300% for all borrowings of the Fund; or (b) from a bank or other
persons for temporary purposes only, provided that such temporary borrowings are in an amount not exceeding 5% of the Fund's total assets at the time when the borrowing is made. This limitation does not preclude the Fund from entering into reverse
repurchase transactions, provided that the Fund has an asset coverage of 300% for all borrowings and repurchase commitments of the Fund pursuant to reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This limitation is not applicable to activities that may be deemed to involve the issuance or sale of a senior security by the Fund, provided that the
Fund's engagement in such activities is consistent with or permitted by the Investment Company Act of 1940, as amended (the “1940 Act”), the rules and regulations promulgated thereunder or interpretations of the SEC or its staff.
3. Underwriting. The Fund will not act as underwriter of securities issued by other persons. This limitation is not applicable to the extent that, in connection with the disposition of portfolio securities (including
restricted securities), the Fund may be deemed an underwriter under certain federal securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This limitation is not applicable to investments in marketable securities which are secured by or represent interests in real estate. This limitation does
not preclude the Fund from investing in mortgage-related securities or investing in companies engaged in the real estate business or that have a significant portion of their assets in real estate (including real estate investment trusts).
5. Commodities. The Fund will not purchase or sell commodities unless acquired as a result of ownership of securities or other investments. This limitation does not preclude the Fund from purchasing or selling options
or futures contracts, from investing in securities or other instruments backed by commodities or from investing in companies which are engaged in a commodities business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except: (a) by loaning portfolio securities; (b) by engaging in repurchase agreements; or (c) by purchasing non-publicly offered debt securities. For purposes of
this limitation, the term “loans” shall not include the purchase of a portion of an issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total assets in a particular industry. This limitation is not applicable to investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
6
With respect to the percentages adopted by the Trust as maximum limitations on its investment policies and limitations, an excess above the fixed percentage will not be a violation of the policy or limitation unless the excess results immediately and directly from the acquisition of any security or the action taken. This paragraph does not apply to the borrowing policy set forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment company, whether organized as a trust, association or corporation, or a personal holding company, may be merged or consolidated with or acquired by the Trust, provided that if such merger, consolidation or acquisition results in an investment in the securities of any issuer prohibited by said paragraphs, the Trust shall, within ninety days after the consummation of such merger, consolidation or acquisition, dispose of all of the securities of such issuer so acquired or such portion thereof as shall bring the total investment therein within the limitations imposed by said paragraphs above as of the date of consummation.
Non-Fundamental. The following limitations have been adopted by the Trust with respect to the Fund and are Non-Fundamental (see “Investment Limitations - Fundamental” above).
1. Pledging. The Fund will not mortgage, pledge, hypothecate or in any manner transfer, as security for indebtedness, any assets of the Fund except as may be necessary in connection with borrowings described in limitation (1) above. Margin deposits, security interests, liens and collateral arrangements with respect to transactions involving options, futures contracts, short sales and other permitted investments and techniques are not deemed to be a mortgage, pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. The Fund will not purchase any security while borrowings (including reverse repurchase agreements) representing more than one third of its total assets are outstanding.
3. Margin Purchases. The Fund will not purchase securities or evidences of interest thereon on “margin.” This limitation is not applicable to short term credit obtained by the Fund for the clearance of purchases and sales or redemption of securities, or to arrangements with respect to transactions involving options, futures contracts, short sales and other permitted investments and techniques.
4. Illiquid Investments. The Fund will not invest more than 15% of its net assets in securities for which there are legal or contractual restrictions on resale and other illiquid securities.
THE INVESTMENT ADVISER
The Adviser is Neiman Funds Management LLC located at 6631 Main Street, Williamsville, New York 14221. As shareholders of the Adviser, Harvey Neiman, Daniel Neiman, Michael Lomas and Glenn Wiggle are regarded to control the Adviser for purposes of the 1940 Act.
Under the terms of the Management Agreement, the Adviser manages the investment portfolio of the Fund, subject to policies adopted by the Trust’s Board of Trustees. Under the Management Agreement, the Adviser, at its own expense and without reimbursement from the Trust, furnishes office space and all necessary office facilities, equipment and executive personnel necessary for managing the assets of the Fund. The Adviser also pays the salaries and fees of all of its officers and employees that serve as officers and trustees of the Trust. The Fund is responsible for the compensation and expenses of any trustees and officers who are not officers or employees of the Adviser. The Adviser receives an annual investment management fee from the Fund of 1.00% of the average daily net assets of the Fund. The Adviser has agreed to waive management fees and reimburse expenses to the extent necessary to maintain total annual operating expenses of the Fund (excluding brokerage fees and commissions, interest and other borrowing expenses, taxes, extraordinary expenses and the indirect costs of investing in Acquired Funds) at 1.45% of its average daily net assets for Class A Shares and at 2.20% of its average daily net assets for Class C Shares through July 31, 2014. For the fiscal year ended March 31, 2012, the Adviser earned management fees totaling $117,863 and waived fees and/or reimbursed expenses totaling $112,232. For the fiscal year ended March 31, 2013, the Adviser earned management fees totaling $150,855 and waived fees and/or reimbursed expenses totaling $95,673.
7
The Adviser retains the right to use the name “Neiman Balanced Allocation Fund” or any derivative thereof in connection with another investment company or business enterprise with which the Adviser is or may become associated. The Trust's right to use the name “Neiman Balanced Allocation Fund” or any derivative thereof automatically ceases ninety days after termination of the Agreement and may be withdrawn by the Adviser on ninety days written notice.
The Adviser may make payments to banks or other financial institutions that provide shareholder services and administer shareholder accounts. If a bank or other financial institution were prohibited from continuing to perform all or a part of such services, management of the Fund believes that there would be no material impact on the Fund or their shareholders. Financial institutions may charge their customers fees for offering these services to the extent permitted by applicable regulatory authorities, and the overall return to those shareholders availing themselves of the financial institution’s services will be lower than to those shareholders who do not. The Fund may from time to time purchase securities issued by financial institutions that provide such services; however, in selecting investments for the Fund, no preference will be shown for such securities.
THE PORTFOLIO MANAGERS
Mr. Harvey Neiman and Mr. Daniel Neiman (the “Portfolio Managers”) are the portfolio managers responsible for the day-to-day management of the Fund. The Portfolio Managers also manage separate accounts for individuals, trusts, corporations, partnerships and retirement plans. The following provides information regarding other accounts managed by the Portfolio Managers as of March 31, 2013:
Harvey Neiman
|
|
|
|
|
Total Assets By
|
|
|
|
|
Number of Accounts
|
Account Type
|
|
|
Number of Accounts
|
Total Assets By
|
by Type Subject to a
|
Subject to a
|
|
Account Type
|
by Account Type
|
Account Type
|
Performance Fee
|
Performance Fee
|
|
Registered
|
1
|
$25.7 Million
|
0
|
0
|
|
Investment
|
|
|
|
|
|
Companies
|
|
|
|
|
|
Other Pooled
|
0
|
0
|
0
|
0
|
|
Investment Vehicles
|
|
|
|
|
|
Other Accounts
|
915
|
$117.8 Million
|
0
|
0
|
Daniel Neiman
|
|
|
|
|
Total Assets By
|
|
|
|
|
Number of Accounts
|
Account Type
|
|
|
Number of Accounts
|
Total Assets By
|
by Type Subject to a
|
Subject to a
|
|
Account Type
|
by Account Type
|
Account Type
|
Performance Fee
|
Performance Fee
|
|
Registered
|
1
|
$25.7 Million
|
0
|
0
|
|
Investment
|
|
|
|
|
|
Companies
|
|
|
|
|
|
Other Pooled
|
0
|
0
|
0
|
0
|
|
Investment Vehicles
|
|
|
|
|
|
Other Accounts
|
951
|
$124 Million
|
0
|
0
|
The Adviser offers several wealth management models in which its private client group (separately managed accounts) participates. These offerings include portfolios of investments substantially identical to the Fund, which could create certain conflicts of interest. Actual or apparent conflicts of interest may arise in connection with the day-to-day management of the Fund and other accounts. The management of the Fund and other accounts may result in unequal time and attention being devoted to the Fund and other accounts. Another potential conflict of interest may arise where another account has the same investment objective as the Fund, whereby the portfolio
8
manager could favor one account over another. Further, a potential conflict could include the portfolio manager’s knowledge about the size, timing and possible market impact of Fund trades, whereby the portfolio manager could use this information to the advantage of other accounts and to the disadvantage of the Fund. These potential conflicts of interest could create the appearance that the portfolio manager is favoring one investment vehicle over another.
As the Fund and any separate accounts managed similarly to the Fund will be managed concurrently, all portfolio transactions are implemented according the Adviser’s trade allocation procedures and side-by-side policies. The Adviser believes that these procedures, among other things, ensure that all trades allocated to advisory clients (including the Fund) fulfill the Adviser’s fiduciary duty to each client and otherwise allocates securities on a basis that is fair and nondiscriminatory. Such procedures are generally applied in numerous instances, including, among other things, blocked and bunched trades. In determining a fair allocation, the Adviser takes into account a number of factors, including among other things, the Adviser’s fiduciary duty to each client, any potential conflicts of interest, the size of the transaction, the relative size of a client’s portfolio, cash available for investment suitability, as well as each client’s investment objectives.
Mr. Harvey Neiman and Mr. Daniel Neiman are not paid a salary. Harvey Neiman and Mr. Daniel Neiman own the majority of outstanding shares of the Adviser. Mr. Harvey Neiman and Mr. Daniel Neiman participate directly in all profits and losses of the Adviser, including the advisory fees paid by the Funds. There are no bonuses, deferred compensation or retirement plans associated with his service to the Fund.
The following table shows the dollar range of equity securities beneficially owned by the Portfolio Managers in the Fund as of March 31, 2013.
|
|
|
Dollar Range of Equity Securities in
|
|
Name of Portfolio Manager
|
|
the Fund
|
|
Mr. Harvey Neiman
|
|
$1-$10,000
|
|
Mr. Daniel Neiman
|
|
$1-$10,000
|
TRUSTEES AND OFFICERS
The Board of Trustees supervises the business activities of the Trust. Each Trustee serves as a trustee until the termination of the Trust, unless the Trustee dies, resigns, retires or is removed. The Board has engaged the Adviser to manage and/or administer the Trust and is responsible for overseeing the Adviser and other service providers to the Trust and the Fund. The Board is currently composed of five Trustees, including three Trustees who are not “interested persons” of the Fund, as that term is defined in the 1940 Act (each an “Independent Trustee”). In addition to four regularly scheduled meetings per year, the Board holds special meetings or informal conference calls to discuss specific matters that may require action prior to the next regular meeting. The Board of Trustees has established an Audit Committee comprised entirely of Trustees who are Independent Trustees. The Audit Committee is generally responsible for (i) overseeing and monitoring the Trust's internal accounting and control structure, its auditing function and its financial reporting process, (ii) selecting and recommending to the full Board of Trustees the appointment of auditors for the Trust, (iii) reviewing audit plans, fees, and other material arrangements with respect to the engagement of auditors, including permissible non-audit services performed; (iv) reviewing the qualifications of the auditor's key personnel involved in the foregoing activities and (v) monitoring the auditor's independence.
The Chairman of the Board of Trustees is Mr. Harvey Neiman, who is an “interested person” of the Trust, within the meaning of the 1940 Act, on the basis of his affiliation with the Fund and the Adviser. The Trust does not have a “lead” independent trustee. The use of an interested Chairman balanced by an independent Audit Committee allows the Board to access the expertise necessary of oversee the Trust, identify risks, recognize shareholder concerns and needs and highlight opportunities. The Audit Committee is able to focus Board time and attention to matters of interest to shareholders and, through its private sessions with the Trust’s auditor, Chief Compliance Officer and legal counsel, stay fully informed regarding management decisions. Considering the size of the Trust and its shareholder base, the Trustees have determined that an interested Chairman balanced by an independent Audit Committee Lead Independent Trustee is the appropriate leadership structure for the Board of Trustees.
9
Mutual funds face a number of risks, including investment risk, compliance risk and valuation risk. The Board oversees management of the Fund’s risks directly and through its officers. While day-to-day risk
management responsibilities rest with the Fund’s Chief Compliance Officer, investment adviser and other service providers, the Board monitors and tracks risk by: (1) receiving and reviewing quarterly reports related to the performance and
operations of the Funds; (2) reviewing and approving, as applicable, the compliance policies and procedures of the Trust, including the Trust’s valuation policies and transaction procedures; (3) periodically meeting with the portfolio
management team to review investment strategies, techniques and related risks; (4) meeting with representatives of key service providers, including the Fund’s investment adviser, administrator, transfer agent, the custodian and the independent
registered public accounting firm, to discuss the activities of the Fund; (5) engaging the services of the Chief Compliance Officer of the Fund to test the compliance procedures of the Trust and its service providers; (6) receiving and reviewing
reports from the Trust’s independent registered public accounting firm regarding the Funds’ financial condition and the Trust’s internal controls; and (7) receiving and reviewing an annual written report prepared by the Chief
Compliance Officer reviewing the adequacy of the Trust’s compliance policies and procedures and the effectiveness of their implementation. The Board has concluded that its general oversight of the investment adviser and other service providers
as implemented through the reporting and monitoring process outlined above allows the Board to effectively administer its risk oversight function.
Each Trustee was nominated to serve on the Board of Trustees based on their particular experiences, qualifications, attributes and skills. The characteristics that have led the Board to conclude that each of the Trustees should continue to serve as
a Trustee of the Trust are discussed below.
Harvey Neiman
. Mr. Neiman has served as a Chairman of the Board of Trustees since the Trust’s inception in 2003. Mr. Neiman is President of Neiman Funds Management LLC, the Fund’s investment adviser, and has worked in the
investment management industry since 1993. Mr. Neiman brings operational, investment management and marketing knowledge to the Board of Trustees.
Michael Lomas.
Mr. Lomas has worked in the investment management industry since 1997 as, among other things, the founder and president of an investment advisory firm and the registered representative of a broker-dealer. Like Mr.
Neiman, Mr. Lomas brings operational and investment management knowledge to the Board of Trustees, as well as marketing, strategic planning and budgeting skills.
Darla Clark
. Ms. Clark has served as a Trustee since the Trust’s inception in 2003. Ms. Clark’s business and banking background provides the Audit Committee with the skills to analyze financial reports and the Board with the
knowledge and expertise to determine the strategic direction of the Fund.
Suzanne Cowan Dimeff.
Ms. Dimeff has served as a Trustee since the Trust’s inception in 2003. Ms. Dimeff is an attorney with a litigation practice. Her strategic planning, organizational and leadership skills help the Board and
Audit Committee set long-term goals for the Fund and establish processes for overseeing Trust policies and procedures.
Luke Fairfield.
Mr. Fairfield has served as a Trustee since the Trust’s inception in 2003. As a Chief Financial Officer and Certified Public Accountant, Mr. Fairfield brings budgeting and financial reporting skills to the Board of
Trustees and the Audit Committee. Mr. Fairfield serves as Chairman of the Trust’s Audit Committee.
10
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.
Interested Trustees and Officers
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
Directorships
|
|
Name,
|
Position
|
Term of Office
|
|
Principal Occupation(s)
|
Number of
|
Held By
|
|
Address
(1)
,
|
with
|
and
|
|
During Past
|
Portfolios
|
Trustee During
|
|
and Age
|
the Trust
|
Length of
|
|
5 Years
|
Overseen
|
Past
|
|
|
|
Time Served
|
|
|
By Trustee
|
5 Years
|
|
|
|
Harvey
|
President
|
Indefinite Term
|
|
Neiman Capital Management LLC,
|
3
|
None
|
|
Neiman
(2)
,
|
and Trustee
|
Since 2003
|
|
Portfolio Manager (1999 – 2009).
|
|
|
|
Year of
|
|
|
|
Neiman Funds Management LLC,
|
|
|
|
birth: 1943
|
|
|
|
Portfolio Manager (2009-Present).
|
|
|
|
|
|
|
|
Independent Solutions Wealth
|
|
|
|
|
|
|
|
Management, LLC, Chief
|
|
|
|
|
|
|
|
Investment Officer (2012-Present).
|
|
|
|
|
|
Michael
|
Trustee
|
Indefinite Term
|
|
NEXT Financial Group, Division
|
3
|
None
|
|
Lomas
(2)
|
|
Since 2009
|
|
Manager and Registered
|
|
|
|
Year of
|
|
|
|
Representative (2000-Present);
|
|
|
|
Birth: 1974
|
|
|
|
Financials Guys LLC, Co-
|
|
|
|
|
|
|
|
owner/Co-founder (2000-Present);
|
|
|
|
|
|
|
|
Independent Solutions Wealth
|
|
|
|
|
|
|
|
Management, LLC, President
|
|
|
|
|
|
|
|
(2007-Present). Neiman Funds
|
|
|
|
|
|
|
|
Management LLC, Business
|
|
|
|
|
|
|
|
Development (2009-Present).
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
|
Treasurer,
|
Indefinite Term
|
|
Neiman Capital Management LLC,
|
NA
|
NA
|
|
Neiman
(2)
,
|
Secretary,
|
Since 2003
|
|
Portfolio Manager (1999 – 2009).
|
|
|
|
Year of
|
and Chief
|
(Chief
|
|
Neiman Funds Management LLC,
|
|
|
|
birth: 1977
|
Compliance
|
Compliance
|
|
Portfolio Manager (2009-Present).
|
|
|
|
|
Officer
|
Officer Since
|
|
Independent Solutions Wealth
|
|
|
|
|
|
2004)
|
|
Management, LLC, Chief
|
|
|
|
|
|
|
|
Financial Officer and Portfolio
|
|
|
|
|
|
|
|
Manger (2012-Present).
|
|
|
(1)
The address of each trustees and officer is c/o Neiman Funds, 6631 Main Street, Williamsville, NY 14221.
(2)
Harvey Neiman, Michael Lomas, and Daniel Neiman are considered to be “interested persons” as defined in
Section 2(a)(19) of the Investment Company Act of 1940 by virtue of their affiliation with the Adviser. Harvey
Neiman is Daniel Neiman’s father.
|
11
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.
Independent Trustees
|
Name,
|
Position
|
Term of Office
|
Principal Occupation(s)
|
Number of
|
Other
|
|
Address
(3)
,
|
with
|
and
|
During Past
|
Portfolios
|
Directorships
|
|
and Age
|
the Trust
|
Length of
|
5 Years
|
Overseen
|
Held By
|
|
|
|
Time Served
|
|
By Trustee
|
Trustee During
|
|
|
|
|
|
|
Past 5 Years
|
|
|
|
Darla
|
Independent
|
Indefinite Term
|
Bank Officer, Senior Vice
|
3
|
None
|
|
Clark, Year
|
Trustee
|
Since 2003
|
President of Regents Bank (2001-
|
|
|
|
of Birth:
|
|
|
Present).
|
|
|
|
1950
|
|
|
|
|
|
|
|
|
Suzanne
|
Independent
|
Indefinite Term
|
Attorney at Dimeff Law Offices,
|
3
|
None
|
|
Cowan
|
Trustee
|
Since 2003
|
Tax & Estate Planning Attorney
|
|
|
|
Dimeff,
|
|
|
(2000-Present).
|
|
|
|
Year of
|
|
|
|
|
|
|
Birth: 1953
|
|
|
|
|
|
|
|
|
Luke
|
Independent
|
Indefinite Term
|
Partner / FPS, CPAs, Certified
|
3
|
None
|
|
Fairfield,
|
Trustee
|
Since 2003
|
Public Accountant (2007-Present).
|
|
|
|
Year of
|
|
|
Chief Financial Officer/ Controller
|
|
|
|
Birth: 1976
|
|
|
at Southwest Greens, a
|
|
|
|
|
|
|
Construction Co. (2002-2010).
|
|
|
(3)
The address of each trustee is c/o Neiman Funds, 6631 Main Street, Williamsville, NY 14221.
BOARD INTEREST IN THE FUND
As of December 31, 2012, the Trustees owned the following amounts in the Fund:
|
|
|
|
|
Aggregate Dollar Range of Equity
|
|
Name of Trustee or Officer
|
|
Dollar Range of Securities In The
|
|
Securities In All Registered Investment
|
|
|
|
Neiman Balanced Allocation Fund
|
|
Companies Overseen By Trustee In
|
|
|
|
|
|
Family of Investment Companies
(1)
|
|
Harvey Neiman
|
|
$10,001-$50,000
|
|
$50,001-$100,000
|
|
Michael Lomas
|
|
$50,001-$100,000
|
|
over $100,000
|
|
Daniel Neiman
|
|
$1-$10,000
|
|
$10,001-$50,000
|
|
Darla Clark
|
|
None
|
|
None
|
|
Suzanne Cowan Dimeff
|
|
None
|
|
None
|
|
Luke Fairfield
|
|
None
|
|
None
|
|
|
(1)
The “Family of Investment Companies” and “Fund Complex” includes the Neiman Large Cap Value Fund,
Neiman Balanced Allocation Fund and the Neiman Tactical Income Fund.
|
12
COMPENSATION
Trustee fees are Trust expenses and each series of the Trust pays a portion of the Trustee fees. Officers and Trustees of the Fund who are deemed “interested persons” of the Trust receive no compensation from the Fund. The following table provides information regarding Trustee compensation for the fiscal year ended March 31, 2013.
|
Name
|
|
Aggregate Compensation from the
|
|
Total Compensation from the
|
|
|
|
Neiman Balanced Allocation Fund
|
|
Fund Complex
(1)
|
|
Harvey Neiman
|
|
$0
|
|
$0
|
|
Michael Lomas
|
|
$0
|
|
$0
|
|
Darla Clark
|
|
$1,000
|
|
$2,750
|
|
Suzanne Cowan Dimeff
|
|
$1,000
|
|
$2,750
|
|
Luke Fairfield
|
|
$1,000
|
|
$2,750
|
(1)
The “Family of Investment Companies” and “Fund Complex” includes the Neiman Large Cap Value Fund,
Neiman Balanced Allocation Fund and the Neiman Tactical Income Fund.
|
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
A principal shareholder is any person who owns (either of record or beneficially) 5% or more of the outstanding shares of the Fund. A control person is one who owns, either directly or indirectly, more than 25% of the voting securities of a company or acknowledges the existence of such control. A controlling shareholder could control the outcome of any proposal submitted to the shareholders for approval, including changes to the Fund’s fundamental policies or the terms of the management agreement with the Adviser. As of July 15, 2013, each of the following shareholders was considered to be either a control person or principal shareholder of the Neiman Balanced Allocation Fund:
CLASS A SHARES
|
Name and Address
|
Shares
|
Percent Ownership
|
|
Type of Ownership
|
|
Pershing, LLC
|
648,903.23
|
75.32%
|
|
Record
|
|
One Pershing Plaza
|
|
|
|
|
|
Jersey City, NJ 07399
|
|
|
|
|
As of July 15, 2013, the trustees and officers as a group owned less than 1.00% of the outstanding shares of the Fund.
CLASS C SHARES
|
Name and Address
|
Shares
|
Percent Ownership
|
|
Type of Ownership
|
|
Pershing, LLC
|
381,421.83
|
71.27%
|
|
Record
|
|
One Pershing Plaza
|
|
|
|
|
|
Jersey City, NJ 07399
|
|
|
|
|
As of July 15, 2013, the trustees and officers as a group owned less than 1.00% of the outstanding shares of the Fund.
AUDIT COMMITTEE
The Board of Trustees has an Audit Committee, which is comprised of the independent members of the Board of Trustees, Darla Clark, Suzanne Cowan Dimeff and Luke Fairfield. The Audit Committee oversees and monitors the Trust’s internal accounting and control structure, its auditing function and financial reporting process. The Audit Committee selects and recommends to the full Board of Trustees the appointment of auditors for the Trust. The Audit Committee also reviews audit plans, fees, and other material arrangements with respect to the
13
engagement of auditors, including permissible non-audit services performed. It reviews the qualifications of the auditor’s key personnel involved in the foregoing activities and monitors the auditor’s independence. During the fiscal year ended March 31, 2013, the Audit Committee met three times.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees, the Adviser is responsible for the Fund's portfolio decisions and the placing of the Fund's portfolio transactions. In placing portfolio transactions, the Adviser seeks the best qualitative execution for the Fund, taking into account such factors as price (including the applicable brokerage commission or dealer spread), the execution capability, financial responsibility and responsiveness of the broker or dealer and the brokerage and research services provided by the broker or dealer. The Adviser generally seeks favorable prices and commission rates that are reasonable in relation to the benefits received. The Adviser may not give consideration to sales of shares of the Trust as a factor in the selection of brokers and dealers to execute portfolio transactions. However, the Adviser may place portfolio transactions with brokers or dealers that promote or sell the Fund’s shares so long as such placements are made pursuant to policies approved by the Fund’s Board of Trustees that are designed to ensure that the selection is based on the quality of the broker’s execution and not on its sales efforts. For the fiscal periods ended March 31, 2011, 2012 and 2013, the Fund did not incur any brokerage commissions.
The Adviser is specifically authorized to select brokers or dealers who also provide brokerage and research services to the Fund and/or the other accounts over which the Adviser exercises investment discretion and to pay such brokers or dealers a commission in excess of the commission another broker or dealer would charge if the Adviser determines in good faith that the commission is reasonable in relation to the value of the brokerage and research services provided. The determination may be viewed in terms of a particular transaction or the Adviser's overall responsibilities with respect to the Trust and to other accounts over which it exercises investment discretion.
Research services include supplemental research, securities and economic analyses, statistical services and information with respect to the availability of securities or purchasers or sellers of securities and analyses of reports concerning performance of accounts. The research services and other information furnished by brokers through whom the Fund effect securities transactions may also be used by the Adviser in servicing all of its accounts. Similarly, research and information provided by brokers or dealers serving other clients may be useful to the Adviser in connection with its services to the Fund. Although research services and other information are useful to the Fund and the Adviser, it is not possible to place a dollar value on the research and other information received. It is the opinion of the Board of Trustees and the Adviser that the review and study of the research and other information will not reduce the overall cost to the Adviser of performing its duties to the Fund under the Agreement. Due to research services provided by brokers, the Fund may direct trades to certain brokers.
Over-the-counter transactions will be placed either directly with principal market makers or with broker-dealers, if the same or a better price, including commissions and executions, is available. Fixed income securities are normally purchased directly from the issuer, an underwriter or a market maker. Purchases include a concession paid by the issuer to the underwriter and the purchase price paid to a market maker may include the spread between the bid and asked prices.
When the Fund and another of the Adviser's clients seek to purchase or sell the same security at or about the same time, the Adviser may execute the transaction on a combined (“blocked”) basis. Blocked transactions can produce better execution for the Fund because of the increased volume of the transaction. If the entire blocked order is not filled, the Fund may not be able to acquire as large a position in such security as it desires or it may have to pay a higher price for the security. Similarly, the Fund may not be able to obtain as large an execution of an order to sell or as high a price for any particular portfolio security if the other client desires to sell the same portfolio security at the same time. In the event that the entire blocked order is not filled, the purchase or sale will normally be allocated on a pro rata basis. The allocation may be adjusted by the Adviser, taking into account such factors as the size of the individual orders and transaction costs, when the Adviser believes an adjustment is reasonable.
The Trust and the Adviser have each adopted a Code of Ethics (the “Code”) under Rule 17j-1 of the Investment Company Act of 1940. The personnel subject to the Code are permitted to invest in securities, including securities that may be purchased or held by the Fund. You may obtain a copy of the Code from the SEC.
14
ADDITIONAL TAX INFORMATION
The following discussion of certain U.S. federal income tax consequences is general in nature and should not be regarded as an exhaustive presentation of all possible tax ramifications. Each shareholder should consult a qualified tax advisor regarding the tax consequences of an investment in the Fund. The tax considerations relevant to a specific shareholder depend upon the shareholder’s specific circumstances, and the following general summary does not attempt to discuss all potential tax considerations that could be relevant to a prospective shareholder with respect to the Fund or its investments. This general summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), the U.S. federal income tax regulations promulgated thereunder, and administrative and judicial interpretations thereof as of the date hereof, all of which are subject to change (potentially on a retroactive basis).
The Fund intends to qualify each year as a regulated investment company under Subchapter M of the Code, which requires compliance with certain requirements concerning the sources of its income, diversification of its assets, and the amount and timing of its distributions to shareholders. Such qualification does not involve supervision of management or investment practices or policies by any government agency or bureau. By so qualifying, the Fund should not be subject to federal income or excise tax on its net investment income or net realized capital gain, which are distributed to shareholders in accordance with the applicable timing requirements.
The Fund intends to distribute substantially all of its net investment income (including any excess of net short-term capital gains over net long-term capital losses) and net realized capital gain (that is, any excess of net long-term capital gains over net short-term capital losses) in accordance with the timing requirements imposed by the Code and therefore should not be required to pay any federal income or excise taxes. Net realized capital gain for a fiscal year is computed by taking into account any capital loss carryforward of the Fund.
To be treated as a regulated investment company under Subchapter M of the Code, the Fund must also (a) derive at least 90% of its gross income from dividends, interest, payments with respect to securities loans, net income from certain publicly traded partnerships and gains from the sale or other disposition of securities or foreign currencies, or other income (including, but not limited to, gains from options, futures or forward contracts) derived with respect to the business of investing in such securities or currencies, and (b) diversify its holding so that, at the end of each fiscal quarter, (i) at least 50% of the market value of the Fund’s assets is represented by cash, U.S. government securities and securities of other regulated investment companies, and other securities (for purposes of this calculation, generally limited in respect of any one issuer, to an amount not greater than 5% of the market value of the Fund’s assets and 10% of the outstanding voting securities of such issuer) and (ii) not more than 25% of the value of its assets is invested in the securities (other than U.S. government securities or the securities of other regulated investment companies) of any one issuer, two or more issuers which the Fund controls and which are determined to be engaged in the same or similar trades or businesses, or the securities of certain publicly traded partnerships.
If the Fund fails to qualify as a regulated investment company under Subchapter M in any fiscal year, it may be treated as a corporation for federal income tax purposes. As such, the Fund would be required to pay income taxes on its net investment income and net realized capital gains, if any, at the rates generally applicable to corporations. Shareholders of the Fund generally would not be liable for income tax on the Fund’s net investment income or net realized capital gains in their individual capacities. However, distributions to shareholders, whether from the Fund’s net investment income or net realized capital gains, would be treated as taxable dividends to the extent of current or accumulated earnings and profits of the Fund.
As a regulated investment company, the Fund is subject to a 4% nondeductible excise tax on certain undistributed amounts of ordinary income and net realized capital gain under a prescribed formula contained in Section 4982 of the Code. The formula requires payment to shareholders during a calendar year of distributions representing at least 98% of the Fund’s ordinary income for the calendar year and at least 98.2% of its net realized capital gain (i.e., the excess of its capital gains over capital losses) realized during the one-year period ending October 31 during such year plus 100% of any income that was neither distributed nor taxed to the Fund during the preceding calendar year. Under ordinary circumstances, the Fund expects to time its distributions so as to avoid liability for this tax.
15
The following discussion of U.S. federal income tax consequences is for the general information of shareholders that are subject to tax. Shareholders that are invested in IRAs or other qualified retirement plans are exempt from income taxation under the Code.
Distributions of taxable net investment income (including the excess of net short-term capital gain over net long-term realized capital loss) generally are taxable to shareholders as ordinary income. However, distributions by the Fund to a non-corporate shareholder may be subject to income tax at the shareholder’s applicable tax rate for long-term capital gain, to the extent that the Fund receives qualified dividend income on the securities it holds, the Fund properly designates the distribution as qualified dividend income, and the Fund and the non-corporate shareholder receiving the distribution meets certain holding period and other requirements. Distributions of net realized capital gain (“capital gain dividends”) generally are taxable to shareholders as long-term capital gain, regardless of the length of time the shares of the Trust have been held by such shareholders. Under current law, capital gain dividends recognized by a non-corporate shareholder generally will be taxed at a maximum income tax rate of 20%. Capital gains of corporate shareholders are taxed at the same rate as ordinary income.
Distributions of taxable net investment income and net realized capital gain will be taxable as described above, whether received in additional cash or shares. All distributions of taxable net investment income and net realized capital gain, whether received in shares or in cash, must be reported by each taxable shareholder on his or her federal income tax return. Dividends or distributions declared in October, November or December as of a record date in such a month, if any, will be deemed to have been received by shareholders on December 31, if paid during January of the following year. Redemptions of shares may result in tax consequences (gain or loss) to the shareholder and are also subject to these reporting requirements.
Redemption of Fund shares by a shareholder will result in the recognition of taxable gain or loss in an amount equal to the difference between the amount realized and the shareholder’s tax basis in the shareholder's Fund shares. Such gain or loss is treated as a capital gain or loss if the shares are held as capital assets. However, any loss realized upon the redemption of shares within six months from the date of their purchase will be treated as a long-term capital loss to the extent of any amounts treated as capital gain dividends during such six-month period. All or a portion of any loss realized upon the redemption of shares may be disallowed to the extent shares are purchased (including shares acquired by means of reinvested dividends) within 30 days before or after such redemption.
Under the Code, the Fund will be required to report to the Internal Revenue Service all distributions of taxable income and net realized capital gains as well as gross proceeds from the redemption or exchange of Fund shares, except in the case of certain exempt shareholders. Under the backup withholding provisions of Section 3406 of the Code, distributions of taxable net investment income and net realized capital gain and proceeds from the redemption or exchange of the shares of a regulated investment company may be subject to withholding of federal income tax (currently, at a rate of 28%) in the case of non-exempt shareholders who fail to furnish the investment company with their taxpayer identification numbers and with required certifications regarding their status under the federal income tax law, or if the Fund is notified by the IRS or a broker that withholding is required due to an incorrect TIN or a previous failure to report taxable interest or dividends. If the withholding provisions are applicable, any such distributions and proceeds, whether taken in cash or reinvested in additional shares, will be reduced by the amounts required to be withheld.
For taxable years beginning after December 31, 2012, an additional 3.8% Medicare tax generally will be imposed on certain net investment income (including ordinary dividends and capital gain distributions received from the Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that any such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust) exceeds certain threshold amounts.
Shareholders should consult their tax advisers about the application of federal, state, local and foreign tax law in light of their particular situation.
Should additional series, or funds, be created by the Trustees, each fund would be treated as a separate tax entity for federal income tax purposes.
16
PRICING OF FUND SHARES
The price (net asset value) of the shares of the Fund is normally determined as of 4:00 p.m., Eastern time on each day the Trust is open for business and on any other day on which there is sufficient trading in the Fund's securities to materially affect the net asset value. The Trust is normally open for business on every day except Saturdays, Sundays and the following holidays: New Year's Day, Martin Luther King Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. The underlying funds are valued at the last reported net asset value.
Securities that are traded on any exchange or on the NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking a last sale price, a long security is valued at its last bid price except when, in the Adviser's opinion, the last bid price does not accurately reflect the current value of the long security. All other long securities for which over-the-counter market quotations are readily available are valued at their last bid price. Lacking a last sale price, a short position is valued at its last ask price except when, in the Adviser’s opinion, the last ask price does not accurately reflect the current value of the short position. All other short positions for which over-the-counter market quotations are available are valued at their last ask price. When market quotations are not readily available, when the Adviser determines the last bid or ask price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review of the Board of Trustees.
Fixed income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices accurately reflect the fair market value of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. If the Adviser 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 Adviser, 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.
SHARES OF THE FUND
The Fund offers Class A and Class C shares. Each class of shares represents an interest in the same portfolio of investments of the Fund and have the same rights, except that each class has exclusive voting rights with respect to its Rule 12b-1 distribution plan. The net asset value per share of each of the classes is expected to differ from time to time.
Class A Shares
The public offering price for Class A shares of the Fund is the next determined NAV plus a sales charge, as shown on the following table.
|
|
Sales Charge as a % of
|
|
|
|
|
|
|
|
|
|
Financial
|
|
|
|
Public Offering
|
|
Net Amount
|
|
Intermediary
|
|
|
Amount of Investment
|
Price
|
|
Invested
|
|
Commission
1
|
|
|
|
|
Less than $50,000
|
5.75%
|
|
6.10%
|
|
5.00%
|
|
|
|
|
$50,000 but less than $100,000
|
4.50%
|
|
4.71%
|
|
3.75%
|
|
|
|
|
$100,000 but less than $250,000
|
3.75%
|
|
3.90%
|
|
3.00%
|
|
17
|
$250,000 but less than $500,000
|
3.00%
|
|
3.09%
|
|
2.50%
|
|
|
$500,000 but less than $1,000,000
|
2.00%
|
|
2.04%
|
|
1.50%
|
|
|
$1,000,000 or more
|
None
|
|
None
|
|
None
|
|
|
1
As a percentage of the public offering price.
|
|
|
|
|
|
|
The Fund permits you to reduce the initial sales charge you pay on Class A shares by using the Right of Accumulation or a Letter of Intent. Each of these methods for reducing the initial sales charge on Class A shares is described below. In taking advantage of these methods for reducing the initial sales charge you will pay, you may link your purchases of shares with purchases of shares in accounts owned by your spouse or children under the age of 21 who share your residential address. It is your responsibility when investing to inform your financial intermediary or the Fund that you would like to have one or more accounts linked together for purposes of reducing the initial sales charge.
Right of Accumulation:
You may qualify for a reduction in the initial sales charge for future purchases of Class A shares based on the current market value of your Class A holdings from prior purchases through the Right of Accumulation. To calculate the sales charge applicable to your net purchase of Class A shares, you may aggregate your investment with the current market value of any Class A shares of the Fund held in:
|
1.
|
Your account(s);
|
|
|
|
2.
|
Your spouse’s account(s);
|
|
|
|
3.
|
Joint accounts with qualified spouse;
|
|
|
|
4.
|
Account(s) of children under the age of 21 who share your residential address;
|
|
|
|
5.
|
Trust accounts established by any of the individuals in items (1) through (3) above. If the person(s) who established the trust is deceased, the trust account may be aggregated with the account(s) of the primary beneficiary of the trust;
|
|
|
|
6.
|
Solely controlled business accounts; and
|
|
|
|
7.
|
Single-participant retirement plans of any of the individuals in items (1) through (3) above.
|
|
|
In order to obtain any reduction in the initial sales charge, you must, before purchasing Class A shares, inform the Fund or your financial intermediary if you have any of the above types of accounts that can be aggregated with your current investment in Class A shares to reduce the applicable sales charge. In order to verify your eligibility for a reduced sales charge, you may be required to provide appropriate documentation, such as an account statement or the social security or tax identification number on an account, so that the Fund may verify (1) the number of shares of the Fund held in your account(s) with the Fund, (2) the number of shares of the Fund held in your account(s) with a financial intermediary, and (3) the number of shares of the Fund held in an account with a financial intermediary owned by your spouse or by children under the age of 21 who share your residential address.
Letter of Intent:
You may purchase Class A shares at the sales charge rate applicable to the total amount of the purchases you intend to make over a 13-month period. The Fund will combine the value of your current purchases with the current value of any Class A shares you purchased previously for (i) your account, (ii) your spouse’s account, (iii) a joint account with your spouse, or (iv) your minor children’s trust or custodial accounts. In calculating the total amount of purchases, you may include in your letter purchases made up to 90 days before the date of the Letter of Intent. A fiduciary purchasing shares for the same fiduciary account, trust or estate may also consider the value of Class A shares purchased previously that were sold subject to a sales charge. In other words, a Letter of Intent allows you to purchase Class A shares of the Fund over a 13-month period and receive the same sales charge as if you had purchased all the shares at the same time. The Fund will also consider the value of Class A shares sold at NAV. Class A shares purchased with dividends or distributions will not be included in the calculation. To be entitled to a reduced sales charge on the purchase of Class A shares based on shares you intend to purchase over the 13-month period, you must send the Fund a Letter of Intent. The 13-month period begins on the date of the first purchase, including those purchases made in the 90-day period before the date of the Letter of Intent. Please note that the purchase price of these prior purchases will not be adjusted.
18
You are not legally bound by the terms of your Letter of Intent to purchase the amount of shares stated in the Letter of Intent. The Letter of Intent does, however, authorize the Fund to hold in escrow 5.00% of the total amount you intend to purchase. If you do not complete the total intended purchase of Class A shares at the end of the 13-month period, the Fund’s transfer agent will redeem the necessary portion of the escrowed shares to make up the difference between the reduced sales charge rate (based on the amount you intended to purchase) and the sales charge rate that would normally apply (based on the actual amount you purchased).
Class C Shares
Class C shares of the Fund are offered at their NAV without an initial sales charge. This means that 100% of your initial investment is invested in shares of the Fund. However, Class C shares purchased before August 1, 2013 are subject to a contingent deferred sales charge (“CDSC”) (based on the lower of the initial investment amount and current NAV) of 1% if redeemed within one year of the purchase date. No CDSC will be charged if you redeem your shares after one year of the purchase date. The holding period for the CDSC begins on the day you buy your shares. Your shares will age one month on the same date the next month and each following month. In determining whether the CDSC applies to a redemption of C shares, C shares not subject to a CDSC are redeemed first.
Sales Charge Waivers
Sales charges may be waived for the following:
No sales charge is imposed on Class A shares of the Fund if the shares were:
|
1.
|
Bought by officers, directors or trustees, and employees and their immediate family members (i.e., spouses, children, grandchildren, parents, grandparents and any dependent of the person, as defined in section 152 of the Internal Revenue Code) of:
|
|
|
|
|
|
Neiman Funds;
|
|
|
|
|
|
Neiman Funds Management LLC and its subsidiaries and affiliates;
|
|
|
|
|
|
The Distributor and its subsidiaries and affiliates; or
|
|
|
|
|
|
Broker-dealers or financial institutions that have entered into dealer agreements with the Funds or their principal underwriter and their subsidiaries and affiliates (or otherwise have an arrangement with a broker-dealer or financial institution with respect to sales of Fund shares).
|
|
|
|
2.
|
Bought by advisory clients of Neiman Funds Management LLC and its subsidiaries and affiliates.
|
|
|
|
3.
|
Bought by certain retirement and deferred compensation plans, and trusts used to fund those plans, including, but not limited to, those plans qualified under sections 401(k), 403(b) or 457 of the Internal Revenue Code and “rabbi trusts.”
|
|
|
|
4.
|
Bought by Financial Intermediaries who have a dealer arrangement with the Distributor, who place trades for their own accounts or for the accounts of their clients and who charge a management, asset allocation, consulting or other fee for their services, or clients of such Financial Intermediaries who place trades for their own accounts if the accounts are linked to the master account of such financial intermediary.
|
|
|
|
5.
|
Bought by an investment adviser, broker-dealer or financial planner, provided arrangements are pre- approved.
|
|
|
|
6.
|
Bought by a bank, trust company or thrift institution which is acting as a fiduciary exercising investment discretion, provided that appropriate notification of such a fiduciary relationship is reported at the time of the investment to the Fund or the Fund’s Distributor.
|
|
|
|
7.
|
Bought by employer-sponsored health savings accounts.
|
|
|
19
|
8.
|
Bought with proceeds from the sale of Class A shares of the Fund, but only if the purchase is made within 90 days of the sale or distribution. Appropriate documentation may be required. Exercising the reinvestment privilege will not affect the character of any gain or loss realized on the redemption for federal income tax purposes, except that if the redemptions resulted in a loss, the reinvestment may result in the loss being disallowed under the “wash sale” rules.
|
|
|
|
9.
|
Bought in connection with plans of reorganizations of the Fund, such as mergers, asset acquisitions and exchange offers to which the Fund is a party.
|
|
|
|
10.
|
Bought by a “charitable organization” as defined for purposes of Section 501(c)(3) of the Internal Revenue Code, or by a charitable remainder trust or life income pool established for the benefit of a charitable organization.
|
|
|
These waivers may not continue indefinitely and may be discontinued at any time without notice.
Additional Purchase
Generally, all purchases must be made in cash. However, the Fund reserves the right to accept payment in readily marketable securities instead of cash in accordance with procedures approved by the Fund’s Board of Trustees. If payment is made in securities, the Fund will value the securities in the same manner in which it computes its NAV.
DISTRIBUTION PLAN
The Fund has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the “Plan”) that allows the Fund to pay distribution and other fees (“Rule 12b-1 Fees”) for the sale and distribution of the Fund’s shares and for services provided to shareholders by the Distributor or the Adviser. The Plan permits the Fund to pay the Distributor and the Adviser Rule 12b-1 Fees as compensation for services and expenses in connection with the distribution of Fund shares. The Distributor must approve all payments made under the plan and may pay any or all amounts received under the Plan to other persons, including the Adviser, for any distribution, promotional or shareholder support services. Up to 0.25% of the Rule 12b-1 Fee may be used as a shareholder servicing fee. The Class A Shares pay an annual Rule 12b-1 Fee equal to 0.25% of its average daily net assets. Class C Shares pay annual Rule 12b-1 Fees equal to 1.00% of its average daily net assets. Because these fees are paid out of the Fund’s assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. During the fiscal period ended March 31, 2011, there were $4,814 and $14,174 of Rule 12b-1 fees incurred by Class A and Class C, respectively. During the fiscal year ended March 31, 2012, there were $15,081 and $57,537 of Rule 12b-1 fees incurred by Class A and Class C, respectively. During the fiscal year ended March 31, 2013, there were $20,705 and $68,036 of Rule 12b-1 fees incurred by Class A and Class C, respectively.
Under the Plan, the Fund may engage in any activities related to the distribution of Fund shares, including without limitation the following: (a) payments, including incentive compensation, to securities dealers or other financial intermediaries, financial institutions, investment advisers and others that are engaged in the sale of shares of the Fund, or that may be advising shareholders of the Fund regarding the purchase, sale or retention of shares of the Fund or that holds Fund shares in omnibus accounts or as shareholder of record, or provides shareholder or administrative services to the Fund and its shareholders; (b) expenses of maintaining personnel (including personnel of organizations with which the Fund has entered into agreements related to the Plan) who engage in or support distribution of shares of the Fund; (c) costs of preparing, printing and distributing prospectuses and statements of additional information and reports of the Fund for recipients other than existing shareholders of the Fund; (d) costs of formulating and implementing marketing and promotional activities, including, but not limited to, sales seminars, direct mail promotions and television, radio, newspaper, magazine and other mass media advertising; (e) costs of preparing, printing and distributing sales literature; (f) costs of obtaining such information, analyses and reports with respect to marketing and promotional activities as the Fund may, from time to time, deem advisable; (g) costs of implementing and operating the Plan; (h) payments made to intermediaries that that render shareholder support services not otherwise provided by the Fund’s transfer agent, including, but not limited to, expenses related processing new account applications, transmitting customer transaction information to the Fund’s transfer agent,
20
answering routine shareholder inquiries, providing office space, equipment and telephone facilities, and providing such other shareholder services as the Fund may reasonably request.
Quarterly reports of the amounts expended under the Plan, and the purposes for which such expenditures were incurred, must be made to the Board for its review. The following are the principal types of activities for which payments were made, and the amounts for each, for the fiscal year ended March 31, 2013:
|
Expense Type
|
|
Class A
|
|
Class C
|
|
Advertising
|
|
$ 8,960
|
|
-
|
|
Printing and postage
|
|
-
|
|
-
|
|
Compensation to underwriter
|
|
69
|
|
-
|
|
Compensation to broker-dealers
|
|
10,021
|
|
$38,161
|
|
Compensation to sales personnel
|
|
|
|
|
|
Payment to Adviser for C share financing
|
|
-
|
|
30,199
|
|
Other
|
|
-
|
|
-
|
|
|
|
$19,050
|
|
$68,360
|
The Trustees expect that the Plan could significantly enhance the Fund’s ability to expand distribution of shares of the Fund. It is also anticipated that an increase in the size of the Fund will produce economies of scale that benefit the shareholders, facilitate more efficient portfolio management, and assist the Fund in seeking to achieve its investment objective.
The Plan has been approved by the Fund’s Board of Trustees, including a majority of the Trustees who are not “interested persons” of the Fund and who have no direct or indirect financial interest in the Plan or any related agreement, by a vote cast in person. Continuation of the Plan and the related agreements must be approved by the Trustees annually, in the same manner, and the Plan or any related agreement may be terminated at any time without penalty by a majority of such independent Trustees or by a majority of the outstanding shares of the Fund. Any amendment increasing the maximum percentage payable under the Plan or other material change must be approved by a majority of the outstanding shares of the Fund, and all other material amendments to the Plan or any related agreement must be approved by a majority of the independent Trustees.
The Trust understands that service organizations may charge fees to their customers who are the beneficial owners of the Fund, in connection with their accounts with such service organizations. Any such fees are not within and would be in addition to any amounts which may be received by an institution under the applicable 12b-1 Plan. Under the terms of each servicing agreement entered into with the Trust, service organizations are required to provide to their customers a schedule of any fees that they may charge in connection with customer investments in the Fund.
Finder’s Fee Commissions
Financial intermediaries who sell $1 million or more of Class A shares in the aggregate of the Fund may receive a finder’s fee. If any defined contribution plan redeems within 18 months of the purchase date all of the shares for which a finder’s fee has been paid, the Adviser may reclaim the finder’s fee paid to the financial intermediary rather than charge a contingent deferred sales charge to the plan. The Adviser reserves the right to alter or change the finder’s fee policy at any time.
Finder’s Fees Paid in the last Fiscal Year
No finder’s fees were paid in the last fiscal year.
Payment of Additional Cash Compensation
|
On occasion, the Adviser may make payments out of its resources and legitimate profits, which may include profits the Adviser derives from investment advisory fees paid by the Fund, to financial intermediaries as
21
incentives to market the Fund, to cooperate with the Adviser’s promotional efforts, or in recognition of the provision of administrative services and marketing and/or processing support. These payments are often referred to as “additional
cash compensation” and are in addition to the sales charges, Rule 12-1 fees, and payments to financial intermediaries as discussed above. The payments are made pursuant to agreements between financial intermediaries and the Adviser and do not
affect the price investors pay to purchase shares of the Fund, the amount the Fund will receive as proceeds from such sales, or the amount of Rule 12b-1 fees and other the expenses paid by the Fund.
Additional cash compensation payments may be used to pay financial intermediaries for: (1) transaction support, including any one-time charges for establishing access to Fund shares on particular trading systems (known
as “platform access fees”); (2) program support, such as expenses related to including the Funds in retirement programs, fee-based advisory or wrap fee programs, fund supermarkets, bank or trust company products, and/or insurance programs
(e.g., individual or group annuity contracts); (3) marketing support, such as providing representatives of the Adviser access to sales meetings, sales representatives and management representatives; (4) firm support, such as business planning
assistance, advertising, and assistance with educating sales personnel about the Funds and shareholder financial planning needs; (5) providing shareholder and administrative services; and (6) providing other distribution-related or asset retention
services.
Additional cash compensation payments generally are structured as basis point payments on gross or net sales or, in the case of platform access fees, fixed dollar amounts.
In addition to member firms of the Financial Industry Regulatory Authority, Inc. (“FINRA”), the Adviser or Distributor also reserves the ability to make payments, as described above, to other financial
intermediaries that sell or provide services to the Fund and shareholders, such as banks, insurance companies, and plan administrators. These firms may include affiliates of the Adviser. You should ask your financial intermediary whether it receives
additional cash compensation payments, as described above, from the Adviser or Distributor or their respective affiliates.
The Adviser, the Distributor and their affiliates also may pay non-cash compensation to financial intermediaries and their representatives in the form of (1) occasional gifts; (2) occasional meals, tickets or other
entertainment; and/or (3) sponsorship support of regional or national conferences or seminars. Such non-cash compensation will be made subject to applicable law.
PURCHASES AND SALES THROUGH BROKER DEALERS
The Fund may be purchased through broker dealers and other intermediaries. The Fund has authorized one or more brokers to receive on its behalf purchase and redemption orders. Such brokers are authorized to designate
other intermediaries to receive purchase and redemption orders on the Fund's behalf. The Fund will be deemed to have received a purchase or redemption order when an authorized broker or, if applicable, a broker's authorized designee, received the
order. Customer orders will be priced at the Fund's net asset value next computed after they are received by an authorized broker or the broker's authorized designee.
ANTI-MONEY LAUNDERING PROGRAM
The Trust has established an Anti-Money Laundering Compliance Program (the “Program”) as required by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (“USA PATRIOT Act”). To ensure compliance with this law, the Program provides for the development of internal practices, procedures and controls, designation of anti-money laundering compliance officers, an ongoing
training program and an independent audit function to determine the effectiveness of the Program.
Procedures to implement the Program include, but are not limited to, determining that the Fund’s transfer agent has established proper anti-money laundering procedures, reporting suspicious and/or fraudulent
activity and a complete and thorough review of all new account applications. The Fund will not transact business with any person or entity whose identity cannot be adequately verified under the provisions of the USA PATRIOT Act.
22
CUSTODIAN
US Bank N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is custodian of the Fund's investments. The custodian acts as the Fund's depository, safekeeps its portfolio securities, collects all income and other payments with respect thereto, disburses funds at the Fund's request and maintains records in connection with its duties.
FUND SERVICES
Mutual Shareholder Services, LLC (“MSS”), 8000 Town Centre Drive, Suite 400, Broadview Heights, OH 44147, acts as the Fund's transfer agent. MSS maintains the records of the shareholders’ accounts, answers shareholders' inquiries concerning their accounts, processes purchases and redemptions of the Fund's shares, acts as dividend and distribution disbursing agent and performs other transfer agent and shareholder service functions. MSS receives an annual fee of $11.50 per shareholder (subject to a minimum monthly fee of $775 per Fund) for these transfer agency services.
In addition, MSS provides the Fund with fund accounting services, which includes certain monthly reports, record-keeping and other management-related services. For its services as fund accountant, MSS receives an annual fee based on the average value of the Fund. These fees are: from $0 to $25 million in assets the annual fee is $21,000, from $25 million to $50 million in assets the annual fee is $30,500, from $50 million to $75 million in assets the annual fee is $36,250, from $75 million to $100 million in assets the annual fee is $42,000, from $100 million to $125 million in assets the annual fee is $47,750, from $125 million to $150 million in assets the annual fee is $53,500, and for asset above $150 million the annual fee is $59,250. For the fiscal periods ended March 31, 2011, 2012, and 2013, the Fund paid MSS $19,996, $36,867, and $36,766, respectively.
Premier Fund Solutions, Inc. (“PFS”) provides the Fund with administrative services, including regulatory reporting and necessary office equipment, personnel and facilities. PFS receives a monthly fee from the Fund equal to an annual rate of 0.07% of the Fund's assets under $200 million, 0.05% of the next $500 million of the Fund's average daily net assets, and 0.03% of the average daily net assets of the Fund thereafter (subject to a minimum monthly fee of $2,000 for the first class and an additional $500 for each additional class). For the fiscal periods ended March 31, 2011, 2012 and 2013, the Fund paid PFS $22,109, $30,082 and $30,000, respectively.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of Cohen Fund Audit Services, Ltd., 1350 Euclid Ave., Suite 800, Cleveland, OH 44115,, has been selected as independent registered public accounting firm for the Fund for the fiscal year ending March 31, 2014. Cohen Fund Audit Services, Ltd. performs an annual audit of the Fund's financial statements and provides financial, tax and accounting consulting services as requested.
DISTRIBUTOR
Rafferty Capital Markets, LLC (the “Distributor”), located at 1010 Franklin Avenue, Suite 101 - 3rd Floor, Garden City, NY 11530,, serves as the principal underwriter of the Fund’s shares. The Distributor is a broker-dealer and acts as the Fund’s principal underwriter in a continuous public offering of the Fund’s shares.
For the fiscal periods ended March 31, 2011, 2012, and 2013, the Distributor was compensated $9,265, $16,260, and $15,513, respectively, for services provided to the Fund. Compensation for the services performed by the Distributor is paid by the Adviser from its own resources and/or from available distribution fees (see “Distribution Plan” above).
DISCLOSURE OF PORTFOLIO HOLDINGS
The Fund is required to include a schedule of portfolio holdings in its annual and semi-annual reports to shareholders, which are sent to shareholders within 60 days of the end of the second and fourth fiscal quarters and which are filed with the SEC on Form N-CSR within 70 days of the end of the second and fourth fiscal quarters. The Fund also is required to file a schedule of portfolio holdings with the SEC on Form N-Q within 60 days of the end of the first and third fiscal quarters. The Fund must provide a copy of the complete schedule of portfolio holdings as filed with the SEC to any shareholder of the Fund, upon request, free of charge. This policy is applied
23
uniformly to all shareholders of the Fund without regard to the type of requesting shareholder (i.e., regardless of whether the shareholder is an individual or institutional investor). Information contained in annual and semi-annual reports mailed to shareholders, as well as information filed with the SEC on Form N-Q and information posted on the Fund’s website, is public information. All other information is non-public information.
The Fund has an ongoing relationship with third party servicing agents to release portfolio holdings information on a daily basis in order for those parties to perform their duties on behalf of the Fund. These third party servicing agents are the Adviser, Transfer Agent, Fund Accounting Agent, Administrator and Custodian. The Fund also may disclose portfolio holdings, as needed, to auditors, legal counsel, proxy voting services (if applicable), pricing services, printers, parties to merger and reorganization agreements and their agents, and prospective or newly hired investment advisers or sub-advisers. The lag between the date of the information and the date on which the information is disclosed will vary based on the identity of the party to whom the information is disclosed. For instance, the information may be provided to auditors within days of the end of an annual period, while the information may be given to legal counsel or prospective sub-advisers at any time. This information is disclosed to all such third parties under conditions of confidentiality. “Conditions of confidentiality” include (i) confidentiality clauses in written agreements, (ii) confidentiality implied by the nature of the relationship (e.g., attorney-client relationship), (iii) confidentiality required by fiduciary or regulatory principles (e.g., custody relationships) or (iv) understandings or expectations between the parties that the information will be kept confidential. The Fund also releases information to Morningstar on a delayed basis after the information has been filed with the SEC or otherwise made public. The Fund believes, based upon its size and history, that these are reasonable procedures to protect the confidentiality of the Fund’s portfolio holdings and will provide sufficient protection against personal trading based on the information.
Except as provided above, the Fund is prohibited from entering into any arrangements with any person to make available information about the Fund’s portfolio holdings without the specific approval of the Board. The Adviser must submit any proposed arrangement pursuant to which the Adviser intends to disclose the Fund’s portfolio holdings to the Board, which will review such arrangement to determine (i) whether it is in the best interests of Fund shareholders, (ii) whether the information will be kept confidential and (iii) whether the disclosure presents a conflict of interest between the interests of Fund shareholders and those of the Adviser, or any affiliated person of the Fund, or the Adviser. Additionally, the Fund, the Adviser, and any affiliated persons of the Adviser, are prohibited from receiving compensation or other consideration, for themselves or on behalf of the Fund, as a result of disclosing the Fund’s portfolio holdings.
FINANCIAL STATEMENTS
The financial statements and independent registered public accounting firm’s report required to be included in the Statement of Additional Information are incorporated herein by reference to the Fund’s Annual Report to Shareholders for the year ended March 31, 2013. The Trust will provide the Annual Report without charge at written or telephone request.
PROXY VOTING STATEMENT
The Board of Trustees of the Trust has delegated responsibilities for decisions regarding proxy voting for securities held by the Fund to the Adviser. The Adviser will vote such proxies in accordance with its proxy policies and procedure. In some instances, the Adviser may be asked to cast a proxy vote that presents a conflict between the interests of the Fund’s shareholders, and those of the Adviser or an affiliated person of the Adviser. In such a case, the Trust’s policy requires that the Adviser abstain from making a voting decision and to forward all necessary proxy voting materials to the Trust to enable the Board of Trustees to make a voting decision. When the Board of Trustees of the Trust is required to make a proxy voting decision, only the Trustees without a conflict of interest with regard to the security in question or the matter to be voted upon shall be permitted to participate in the decision of how the Fund’s vote will be cast.
The Adviser’s proxy voting policies and procedures are attached as Appendix A to this Statement of Additional Information.
24
MORE INFORMATION. The actual voting records relating to portfolio securities during the most recent 12-Month period ended June 30 will be available after August 31 without charge, upon request by calling toll-free,
1-877-385-2720 or by accessing the SEC’s website at www.sec.gov. In addition, a copy of the Fund’s proxy voting policies and procedures are also available by calling 1-877-385-2720 and will be sent within three business days of receipt of
a request.
25
NEIMAN FUNDS MANAGEMENT LLC
& NEIMAN FUNDS
PROXY VOTING POLICIES AND PROCEDURES
July 22, 2003
|
Pursuant to the recent adoption by the Securities and Exchange Commission (the “Commission”) of Rule 206(4)-6 (17 CFR 275.206(4) -6) and amendments to Rule 204-2 (17 CFR 275.204 -2) under the Investment Advisers Act of 1940 (the “Act”), it is a fraudulent, deceptive, or manipulative act, practice or course of business, within the meaning of Section 206(4) of the Act, for an investment adviser to exercise voting authority with respect to client securities, unless (i) the adviser has adopted and implemented written policies and procedures that are reasonably designed to ensure that the adviser votes proxies in the best interests of its clients, (ii) the adviser describes its proxy voting procedures to its clients and provides copies on request, and (iii) the adviser discloses to clients how they may obtain information on how the adviser voted their proxies.
In order to fulfill its responsibilities under the Act, Neiman Funds Management LLC, (hereinafter “we” or “our”) has adopted the following policies and procedures for proxy voting with regard to companies in investment portfolios of our clients.
KEY OBJECTIVES
The key objectives of these policies and procedures recognize that a company’s management is entrusted with the day-to-day operations and longer term strategic planning of the company, subject to the oversight of the company’s board of directors. While “ordinary business matters” are primarily the responsibility of management and should be approved solely by the corporation’s board of directors, these objectives also recognize that the company’s shareholders must have final say over how management and directors are performing, and how shareholders’ rights and ownership interests are handled, especially when matters could have substantial economic implications to the shareholders.
Therefore, we will pay particular attention to the following matters in exercising our proxy voting responsibilities as a fiduciary for our clients:
Accountability
. Each company should have effective means in place to hold those entrusted with running a company’s business accountable for their actions. Management of a company should be accountable to its board of directors and the board should be accountable to shareholders.
Alignment of Management and Shareholder Interests
. Each company should endeavor to align the interests of management and the board of directors with the interests of the company’s shareholders. For example, we generally believe that compensation should be designed to reward management for doing a good job of creating value for the shareholders of the company.
Transparency
. Promotion of timely disclosure of important information about a company’s business operations and financial performance enables investors to evaluate the performance of a company and to make informed decisions about the purchase and sale of a company’s securities.
DECISION METHODS
We generally believe that the individual portfolio managers that invest in and track particular companies are the most knowledgeable and best suited to make decisions with regard to proxy votes. Therefore, we rely on those individuals to make the final decisions on how to cast proxy votes.
26
No set of proxy voting guidelines can anticipate all situations that may arise. In special cases, we may seek insight from our managers and analysts on how a particular proxy proposal will impact the financial prospects of a company, and vote accordingly.
In some instances, a proxy vote may present a conflict between the interests of a client, on the one hand, and our interests or the interests of a person affiliated with us, on the other. In such a case, we will abstain from making a voting decision and will forward all of the necessary proxy voting materials to the client to enable the client to cast the votes.
SUMMARY OF PROXY VOTING GUIDELINES
Election of the Board of Directors
We believe that good corporate governance generally starts with a board composed primarily of independent directors, unfettered by significant ties to management, all of whose members are elected annually. In addition, key board committees should be entirely independent.
The election of a company’s board of directors is one of the most fundamental rights held by shareholders. Because a classified board structure prevents shareholders from electing a full slate of directors annually, we will generally support efforts to declassify boards or other measures that permit shareholders to remove a majority of directors at any time, and will generally oppose efforts to adopt classified board structures.
Approval of Independent Auditors
We believe that the relationship between a company and its auditors should be limited primarily to the audit engagement, although it may include certain closely related activities that do not raise an appearance of impaired independence.
We will evaluate on a case-by-case basis instances in which the audit firm has a substantial non-audit relationship with a company to determine whether we believe independence has been, or could be, compromised.
Equity-based compensation plans
We believe that appropriately designed equity-based compensation plans, approved by shareholders, can be an effective way to align the interests of shareholders and the interests of directors, management, and employees by providing incentives to increase shareholder value. Conversely, we are opposed to plans that substantially dilute ownership interests in the company, provide participants with excessive awards, or have inherently objectionable structural features.
We will generally support measures intended to increase stock ownership by executives and the use of employee stock purchase plans to increase company stock ownership by employees. These may include:
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1.
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Requiring senior executives to hold stock in a company.
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2.
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Requiring stock acquired through option exercise to be held for a certain period of time.
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3.
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Using restricted stock grants instead of options.
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4.
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Awards based on non-discretionary grants specified by the plan’s terms rather than subject to management’s discretion.
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While we evaluate plans on a case-by-case basis, we will generally oppose plans that have the following features:
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1.
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Annual option grants that would exceed 2% of outstanding shares.
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2.
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Ability to issue options with an exercise price below the stock’s current market price.
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3.
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Automatic share replenishment (“evergreen”) feature.
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27
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4.
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Authorization to permit the board of directors to materially amend a plan without shareholder approval.
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5.
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Authorizes the re-pricing of stock options or the cancellation and exchange of options without shareholder approval.
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These are guidelines, and we consider other factors, such as the nature of the industry and size of the company, when assessing a plan’s impact on ownership interests.
Corporate Structure
We view the exercise of shareholders’ rights, including the rights to act by written consent, to call special meetings and to remove directors, to be fundamental to good corporate governance.
Because classes of common stock with unequal voting rights limit the rights of certain shareholders, we generally believe that shareholders should have voting power equal to their equity interest in the company and should be able to approve or reject changes to a company’s by-laws by a simple majority vote.
Because the requirement of a supermajority vote can limit the ability of shareholders to effect change, we will support proposals to remove super-majority (typically from 66.7% to 80%) voting requirements for certain types of proposals and oppose proposals to impose super-majority requirements.
We will generally support the ability of shareholders to cumulate their votes for the election of directors.
Shareholder Rights Plans
While we recognize that there are arguments both in favor of and against shareholder rights plans, also known as poison pills, such measures may tend to entrench current management, which we generally consider to have a negative impact on shareholder value.
We believe the best approach is for a company to seek shareholder approval of rights plans and we generally support shareholder resolutions requesting that shareholders be given the opportunity to vote on the adoption of rights plans.
We will generally be more inclined to support a shareholder rights plan if the plan (i) has short-term “sunset” provisions, (ii) is linked to a business strategy that will likely result in greater value for shareholders, (iii) requires shareholder approval to reinstate the expired plan or adopt a new plan at the end of its term, and (iv) is subject to mandatory review by a committee of independent directors.
A copy of these Proxy Voting Policies and Procedures is available to our clients, without charge, upon request, by calling
1-877-385-2720
and on our website at
http://www.neimanfunds.com
. We will send a copy of these Proxy Voting Policies and Procedures within three business days of receipt of a request, by first-class mail or other means designed to ensure equally prompt delivery.
In addition, we will provide each client, without charge, upon request, information regarding the proxy votes cast by us with regard to the client’s securities.
28
Neiman Funds
Neiman Tactical Income Fund
Class A Shares
(NTAFX)
For Investors Seeking Total Return With Capital Preservation as a Secondary Objective.
Prospectus
August 1, 2013
As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved of these securities, nor has the Commission determined that this Prospectus is complete or accurate. Any representation to the contrary is a criminal offense.
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Table of Contents
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Summary Section
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1
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Investment Objective
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1
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Fees and Expenses of the Fund
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1
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The Principal Investment Strategy of the Fund.
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2
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The Principal Risks of Investing in the Fund
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3
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Performance History
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5
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Management
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5
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Purchase and Sale of Fund Shares
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6
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Tax Information
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6
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Payment to Broker-Dealers and Other Financial Intermediaries
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6
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Investment Objectives, Principal Investment Strategies,
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Related Risks, and Disclosure of Portfolio Holdings
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6
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Investment Objective
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6
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The Principal Investment Strategy of the Fund.
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6
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The Investment Selection Process Used by the Fund
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6
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The Principal Risks of Investing in the Fund
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7
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Portfolio Holdings Disclosure
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11
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Management
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11
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The Investment Adviser
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11
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The Investment Sub-Adviser
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11
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Shareholder Information
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12
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Pricing of Fund Shares
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12
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How to Purchase Shares
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13
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Purchases Through Financial Intermediaries
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13
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Fund Direct Purchases
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14
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Customer Identification Program
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14
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Sales Charges
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14
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Class A Shares
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14
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Sales Charge Waivers
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16
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Rule 12b-1 Fees
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17
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Minimum Investments
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17
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Types of Account Ownership.
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18
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Instructions For Opening and Adding to an Account
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18
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Telephone and Wire Transactions
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19
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Tax-Deferred Plans
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19
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Types of Tax-Deferred Accounts
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19
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Automatic Investment Plans
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20
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Instructions For Selling Fund Shares
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20
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Additional Redemption Information
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21
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Shareholder Communications
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22
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Dividends and Distributions.
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22
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Market Timing
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23
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Taxes
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23
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Other Fund Service Providers
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24
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Privacy Policy
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24
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Financial Highlights
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25
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Summary Section
Investment Objective
• The Neiman Tactical Income Fund's (the “Fund”) primary objective is total return with capital preservation as a secondary objective.
Fees and Expenses of the Fund
The following table describes the expenses and fees that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in the Fund. More information about these and other discounts is available from your financial professional and in “Sales Charges” on page 14 of the Fund's prospectus and “Shares of the Fund” on page 17 of the Fund's statement of additional information.
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Shareholder Fees
(fees paid directly from your investment)
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Class A Shares
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Maximum Sales Charge (Load) Imposed on Purchases
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5.75
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%
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(as percentage of offering price)
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Annual Fund Operating Expenses
(expenses that you
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pay each year as a percentage of the value of your investment)
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Management Fees
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1.00
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%
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Distribution and Service (12b-1) Fees
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0.25
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%
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Other Expenses
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0.41
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%
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Acquired Fund Fees and Expenses
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0.44
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%
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Total Annual Fund Operating Expenses
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2.10
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%
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Fee Waiver/Expense
Reimbursement
(a)
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(
0.21
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%
)
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Total Annual Fund Operating Expenses After Fee Waiver /
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1.89
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%
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Expense Reimbursement
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(a)
The adviser has contractually agreed to waive management fees and reimburse expenses to the extent necessary to maintain total annual operating expenses of the Fund (excluding brokerage fees and commissions, interest and other borrowing expenses, taxes, indirect expenses (such as expenses of other investment companies in which the Fund invests) and extraordinary expenses) at 1.45% of its average daily net assets for Class A Shares through July 31, 2014. The fee waiver will automatically terminate on July 31, 2014 unless it is renewed by the Adviser. The Adviser may not terminate the fee waiver or expense reimbursement before July 31, 2014.
Expense Example
The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% annual return each year and that the Fund’s operating expenses remain the same each year. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
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One Year
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Three Years
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Five Years
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Ten Years
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Class A Shares
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$192
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$638
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$1,110
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$2,415
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Prospectus 1
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund's performance. During the most recent fiscal period, the Fund’s portfolio turnover rate was 364.88% of the average value of its portfolio.
The Principal Investment Strategy of the Fund
The Fund's investment sub-adviser, PageOne Funds Management, LLC, (the “Sub-Adviser”) seeks to achieve the Fund's primary investment objective by investing primarily in a portfolio of open-end investment companies (“mutual funds”) and/or Exchange-Traded Funds (“ETFs”) that hold fixed income securities. The mutual funds and ETFs are considered the Fund’s underlying funds (“underlying funds”). Under normal circumstances, the primary asset class for achieving the Fund's total return objective is low-rated corporate bonds, or “high yield bonds” / “junk bonds.” The Sub-Adviser defines high yield bonds as those rated lower than Baa3 by Moody's Investors Service (“Moody's”) or lower than BBB- by Standard and Poor's Rating Group (“S&P”), or if unrated, determined by the adviser to be of similar credit quality. The Sub-Adviser is unconstrained in terms of the underlying mutual fund and/or ETF's portfolio maturity, credit rating, issuer, country, or currency. The Sub-Adviser invests the Fund's assets in a manner consistent with the primary investment strategy when it believes that the market environment in terms of the economic cycle, market cycle, and interest rate cycle, is conducive to investing in high yield bonds. Tactical decisions are made to move out of high yield bonds for one of three reasons:
-
Economic and trend analysis identify more attractive opportunities in cash, cash equivalents,
and/or money market mutual funds.
-
Credit Risk is increasing, which may lead to increasing allocations to cash, cash equivalents,
and/or money market mutual funds.
-
Both Credit and Interest Rate Risk are increasing, which may lead to overweight positions in
cash and/or money market funds.
The Sub-Adviser may also invest in mutual funds and/or ETFs that hold other fixed income categories such as foreign and emerging markets bonds, government bonds, or bank loans. The Sub-Adviser may also invest up to 50% of the Fund's assets in mutual funds and/or ETFs that primarily hold convertible bonds or preferred stocks. These mutual funds and/or ETFs may also hold low-rated bonds, or “high yield bonds” / “junk bonds.”
To maintain the secondary investment objective consistent with capital preservation, the Sub-Adviser may invest in cash, cash equivalents, and/or money market mutual funds. The Sub-Adviser is unconstrained in its allocation to such investments and may invest up to 100% of the portfolio in such “defensive” positions. The Sub-Adviser may also invest up to 20% of the Fund's assets in inverse mutual funds and/or ETFs in an effort to hedge risks such as interest rate risk. Inverse funds are designed to deliver performance opposite of that of a benchmark index. While the Fund itself does not use derivatives, shorting, or leverage, the underlying mutual funds and/or ETFs may use derivatives and/or employ shorting or leveraging strategies. The Sub-Adviser invests the Fund's assets in a manner consistent with capital preservation when it believes that the market environment calls for a defensive portfolio allocation.
The Sub-Adviser sells the underlying funds in the portfolio when it believes they are not consistent with the primary and/or secondary investment objective as discussed above.
The Fund’s investment objective may be changed by the Board of Trustees without shareholder approval. You will receive written notice of any material change in the Fund’s objective.
Prospectus 2
The Principal Risks of Investing in the Fund
The Fund may invest in underlying funds that have any or all of these characteristics and related risks:
Risks in General
The same factors that affect stock market performance generally affect the underlying funds owned by the Fund. Domestic economic growth and market conditions, interest rate levels, and political events are among these factors. There is risk that these and other factors may adversely affect the Fund's performance. You should consider your own investment goals, time horizon, and risk tolerance before investing in the Fund. An investment in the Fund may not be appropriate for all investors and is not intended to be a complete investment program. An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. You may lose money by investing in the Fund.
Mutual Fund and ETF Risk
Mutual funds and ETFs are subject to investment advisory and other expenses, which will be indirectly paid by the Fund. As a result, your cost of investing in the Fund will be higher than the cost of investing directly in other mutual funds and ETFs and may be higher than other mutual funds that invest directly in fixed income securities. Additionally, inverse mutual funds tend to limit the Fund's participation in overall market-wide gains. Mutual fund and ETFs are subject to specific risks depending on the nature of their investments.
Investments in ETFs and inverse and leveraged mutual funds carries correlation risk. Correlation risk is the risk that the performance of an ETF may not completely replicate the performance of the underlying index or basket of stocks. A number of factors may affect an ETF’s ability to achieve a high degree of correlation with its benchmark, including fees, expenses, transaction costs, disruptions or illiquidity in the markets for the securities or financial instruments in which the ETF invests, among other things. There can be no guarantee that an ETF will achieve a high degree of correlation. Failure to achieve a high degree of correlation may prevent the Fund from achieving its investment objective.
Risks of Investing in Mutual Funds and ETFs that own Fixed Income Securities
The Fund may invest in underlying funds that own bonds and other debt securities. Theses securities are subject to the risk that their issuer may not be able to repay the principal and interest when due. This could result in a loss to the underlying fund. In addition, the value of bond and other debt securities held by an underlying fund can change in response to changes in prevailing interest rates, causing volatility and possible loss of value as rates increase. Bonds with longer maturities may lose more value due to interest rate increases than bonds with shorter maturities.
High Yield Securities Risk / Junk Bond Risk
The Fund may invest in underlying funds that purchase high yield securities. High yield securities are considered speculative and are less likely than higher rated securities to have the capacity to pay interest and repay principal when due in the event of adverse business, financial or economic conditions. Lower-quality bonds, known as “junk bonds” or “high-yield bonds”, present greater risk than bonds of higher quality, including an increased risk of default. An economic downturn or period of rising interest rates could adversely affect the market for these bonds and reduce the Fund’s ability to sell the mutual funds and/or ETFs that hold these type of securities at a favorable price or without a significant impact to the Fund’s share price. The lack of a liquid market for these bonds could decrease the Fund’s share price.
Foreign and Emerging Markets Risk
To the extent the Fund invests in underlying funds that own foreign fixed income securities, the Fund may be subject to risks not usually associated with owning securities of U.S. issuers. These risks include adverse political, social and economic developments, differing auditing and legal standards,
Prospectus 3
war, expropriation and nationalization. To the extent the Fund invests in underlying funds that own fixed income securities in emerging markets, the Fund will be subject to emerging market risks. The risks of foreign securities are typically increased in emerging markets. These risks include, among other things, political and economic instability, less developed securities markets and currency devaluations.
Convertible Securities Risk
To the extent that the Fund invests in underlying funds that own convertible securities, the Fund may be subject to additional risks. The market values of convertible securities tend to decline as interest rates increase and, conversely, to increase as interest rates decline. A convertible security’s market value, however, tends to reflect the market price of the common stock of the issuing company when that stock price approaches or is greater than the convertible security’s “conversion price.” The value of a synthetic convertible security will respond differently to market fluctuations than a traditional convertible security because a synthetic convertible is composed of two or more separate securities or instruments, each with its own market value. If the value of the underlying common stock or the level of the index involved in the convertible component falls below the exercise price of the warrant or option, the warrant or option may lose all value.
Preferred Stock Risk
To the extent that the Fund invests in underlying funds that invest in shares of preferred stock, the Fund may be subject to additional risks. Preferred shares generally pay dividends at a specified rate and generally have preference over common shares in the payments of dividends and the liquidation of an issuer's assets. Shareholders may suffer a loss of value if dividends are not paid. Shareholders may experience a loss of value due to adverse interest rate movements or a decline in the issuer's credit rating.
Derivatives Risk
To the extent that the Fund invests in underlying funds that invest in derivatives, the Fund may be subject to additional risks. Derivatives may be riskier than other types of investments because they may be more sensitive to changes in economic and market conditions and could result in losses that significantly exceed an underlying fund's original investment. Derivatives expose the underlying fund to counterparty risk (the risk that the derivative counterparty will not fulfill its contractual obligations), including credit risk (the risk that a counterparty will fail to make payments when due or default completely) of the derivative counterparty. Many derivatives create leverage thereby causing the underlying fund to be more volatile than it would have been if it had not used derivatives. Additionally, even a small investment in an underlying fund that holds derivatives (which include options, futures, swap contracts and other transactions) may subject the Fund to leverage risk which can have a significant impact on the Fund's performance.
Short Selling Risk
Some of the underlying funds may enter into short sales of certain securities and must borrow the securities to make delivery to the buyer. The underlying fund may not always be able to borrow a security it wants to sell short. The underlying fund also may be unable to close out an established short position at an acceptable price, and may have to sell securities it owns at disadvantageous times to cover its short positions. Furthermore, taking short positions in securities results in a form of leverage. Leverage involves special risks described below. A underlying fund's loss on a short sale is potentially unlimited because there is no upward limit on the price a borrowed security could attain.
Inverse Risk and Leverage Risk
To the extent that the Fund invests in underlying funds that employ inverse and leverage investment strategies, the Fund may be subject to additional risks. An inverse underlying fund seeks to deliver the opposite performance of an index, thus the Fund may incur a loss as a result of a investing in an underlying fund that is inversely positioned if the price of the underlying fund’s short position instruments increase. The underlying fund's losses are potentially unlimited in a short position transaction. A leveraged underlying fund seeks to deliver multiples of the performance of the index or benchmark it tracks. Leverage causes the value of the underlying fund’s shares to be more volatile than if the
Prospectus 4
underlying fund did not use leverage. The compounding effect of a security’s returns has a significant impact on all types of investments. As a result of compounding, inverse and leveraged underlying funds may have additional risks. An inverse underlying fund’s performance for periods greater than one day is likely to be either greater than or less than the inverse of the index performance as stated in the underlying fund’s objective. Similarly, a leveraged underlying fund’s performance for periods greater than one day is likely to be either greater than or less than the index performance times the stated multiple in the underlying fund’s objective. This effect becomes more pronounced for these types of underlying funds as market volatility increases. Investments by the Fund in inverse and leveraged underlying funds may magnify changes in the Fund’s share price and thus result in increased volatility of returns. These types of investments may prevent the Fund from achieving its investment objective.
Portfolio Turnover
The Fund may engage in short-term trading to try to achieve its objective and may have portfolio turnover rates significantly in excess of 100%. Increased portfolio turnover may cause the Fund to incur higher transaction costs and brokerage costs, which may adversely affect the Fund's performance, and may produce increased taxable distributions.
Sector Risks
Sector risk is the possibility that securities within the same group of industries will decline in price due to sector-specific market or economic developments. The Fund may invests a significant portion of its total assets in underlying funds that hold fixed income securities. Securities in the same sector are likely to react similarly to interest rate changes, adverse legislative or regulatory changes, adverse market conditions, and/or increased competition affecting that market segment.
Investment Management Risk
The Sub-Adviser's strategy may fail to produce the intended results. In addition, the Sub-Adviser has not previously managed a mutual fund.
Risk of Non-Diversification
The Fund is a “non-diversified” portfolio, which means that it has the ability to take larger positions in a smaller number of securities than a portfolio that is “diversified.” Non-diversification increases the risk that the value of the Fund could go down because of the poor performance of a single investment. The Fund may invest in underlying funds that are non-diversified. A non-diversified fund has the ability to take larger positions in a smaller number of securities than a portfolio that is “diversified.” Investing in non-diversified funds may result in greater volatility.
Performance History
Although past performance of a fund is no guarantee of how it will perform in the future, historical performance may give you some indication of the risk of investing in the Fund because it demonstrates how its returns have varied over time. There is no performance information for the Fund since the Fund has not completed one full calendar year of operation as of the date of this prospectus.
Management
Investment Adviser
Neiman Funds Management LLC is the Fund's investment adviser (the “Adviser”). PageOne Funds Management, LLC is the Fund’s Sub-Adviser.
Portfolio Managers
Edgar R. Page, Joseph Arena, and Kyle Webber have managed the Fund since its inception in 2012. Mr. Page is the Lead Portfolio Manager, Founder and Principal of the Sub-Adviser. Mr. Arena is a portfolio manager of the Sub-Adviser. Mr. Webber is an assistant portfolio manger of the Sub-Adviser.
Purchase and Sale of Fund Shares (Class A Shares)
The minimum initial and subsequent investment amounts for various types of accounts offered by the Fund are shown below.
|
|
|
Initial
|
|
Additional
|
|
|
Regular Account
|
$
|
2,500
|
|
$100
|
|
|
Automatic Investment Plan
|
$
|
1,000
|
|
$100
|
*
|
|
IRA Account
|
$
|
1,000
|
|
$100
|
|
*An Automatic Investment Plan requires a $100 minimum automatic monthly or quarterly investment.
You may purchase or redeem Fund shares on any business day directly with the Fund or through your financial intermediary. You may conduct transactions by mail (Neiman Funds, c/o Mutual Shareholder Services, 8000 Town Centre Drive, Suite 400, Broadview Heights, Ohio 44147), by wire, or by telephone at 1-877-385-2720.
Tax Information
The Fund’s distributions will be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund or its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
Investment Objectives, Principal Investment Strategies, Related Risks, and Disclosure of Portfolio Holdings
Investment Objective
• The Neiman Tactical Income Fund's (the “Fund”) primary objective is total return with capital preservation as a secondary objective.
The Principal Investment Strategy of the Fund
Under normal circumstances, PageOne Funds Management, LLC (the “Sub-Adviser”) invests the Fund’s assets primarily in a portfolio of open-end investment companies (“mutual funds”) and/or Exchange-Traded Funds (“ETFs”) that hold fixed income securities. The Sub-Adviser may invest up to 50% of the Fund's assets in mutual funds and/or ETFs that primarily hold convertible bonds or preferred stocks. The Fund’s secondary investment objective is capital preservation. To maintain the secondary investment objective the Sub-Adviser may invest the Fund’s assets in cash, cash equivalents, and/or money market mutual funds, including up to 20% of the Fund's assets in inverse mutual funds and/or ETFs.
The Investment Selection Process Used by the Fund
The Sub-Adviser seeks to achieve the Fund's primary investment objective by investing primarily in a
Prospectus 6
portfolio of underlying funds. Under normal circumstances, the primary asset class for achieving the Fund's total return objective is low-rated corporate bonds, or “high yield bonds” / “junk bonds.” The
Sub-Adviser defines high yield bonds as those rated lower than Baa3 by Moody's Investors Service (“Moody's”) or lower than BBB- by Standard and Poor's Rating Group (“S&P”), or if unrated, determined by the adviser to be of
similar credit quality. The Sub-Adviser is unconstrained in terms of the underlying mutual fund and/or ETF’s portfolio maturity, credit rating, issuer, country, or currency. The Sub-Adviser invests the Fund's assets in a manner consistent with
the primary investment strategy when it believes that the market environment in terms of the economic cycle, market cycle, and interest rate cycle, is conducive to investing in high yield bonds. Tactical decisions are made to move out of high yield
bonds for one of three reasons:
-
Economic and trend analysis identify more attractive opportunities in cash, cash equivalents,
and/or money market mutual funds.
-
Credit Risk is increasing, which may lead to increasing allocations to cash, cash equivalents,
and/or money market mutual funds.
-
Both Credit and Interest Rate Risk are increasing, which may lead to overweight positions in
cash and/or money market funds.
The Sub-Adviser may also invest in mutual funds and/or ETFs that hold other fixed income categories such as foreign and emerging markets bonds, government bonds, or bank loans. The Sub-Adviser may also invest up to 50% of the
Fund's assets in mutual funds and/or ETFs that primarily hold convertible bonds or preferred stocks. These mutual funds and/or ETFs may also hold low-rated bonds, or “high yield bonds” / “junk bonds.”
To maintain the secondary investment objective consistent with capital preservation, the Sub-Adviser may invest in cash, cash equivalents, and/or money market mutual funds. The Sub-Adviser is unconstrained in its allocation to
such investments and may invest up to 100% of the portfolio in such “defensive” positions. The Sub-Adviser may also invest up to 20% of the Fund's assets in inverse mutual funds and/or ETFs in an effort to hedge risks such as interest rate
risk. Inverse funds are designed to deliver performance opposite of that of a benchmark index. While the Fund itself does not use derivatives, shorting, or leverage, the underlying mutual funds and/or ETFs may use derivatives and/or employ shorting
or leveraging strategies. The Sub-Adviser invests the Fund's assets in a manner consistent with capital preservation when it believes that the market environment calls for a defensive portfolio allocation.
The Sub-Adviser sells the underlying funds in the portfolio when it believes they are not consistent with the primary and/or secondary investment objective as discussed above.
The Fund’s investment objective may be changed by the Board of Trustees without shareholder approval. You will receive written notice of any material change in the Fund’s objective.
The Principal Risks of Investing in the Fund
The Fund may invest in underlying funds that have any or all of these characteristics and related risks:
Risks in General
The same factors that affect stock market performance generally affect the underlying funds owned by the Fund. Domestic economic growth and market conditions, interest rate levels, and political events are among these factors.
There is risk that these and other factors may adversely affect the Fund's performance. You should consider your own investment goals, time horizon, and risk tolerance before investing in the Fund. An investment in the Fund may not be appropriate
for all investors and is not intended to be a complete investment program. An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. You may
lose money by investing in the Fund.
Prospectus 7
Mutual Fund and ETF Risk
The Fund invests a substantial portion of its assets in mutual funds and ETFs. To the extent that the Fund invests in mutual funds and ETFs, the Fund will indirectly bear its proportionate share of any expenses (such as operating expenses and advisory fees) that may be paid by the mutual funds and ETFs in which it invests. These expenses would be in addition to the advisory and other expenses that the Fund bears in connection with its own operations. The Fund will also incur brokerage costs when it purchases ETFs. Investments in certain ETFs also may be subject to substantial regulation, including potential restrictions on liquidity and potential adverse tax consequences if the ETFs does not meet certain requirements.
Correlation risk is the risk that the performance of an ETF may not completely replicate the performance of the underlying index or basket of stocks. A number of factors may affect an ETF’s ability to achieve a high degree of correlation with its benchmark, including fees, expenses, transaction costs, disruptions or illiquidity in the markets for the securities or financial instruments in which the ETF invests, among other things. There can be no guarantee that an ETF will achieve a high degree of correlation. Failure to achieve a high degree of correlation may prevent the Fund from achieving its investment objective.
Risks of Investing in Mutual Funds and ETFs that own Fixed Income Securities
The Fund may invest in underlying funds that own bonds and other debt securities. Theses securities are subject to the risk that their issuer may not be able to repay the principal and interest when due. This could result in a loss to the underlying fund. In addition, the value of bond and other debt securities held by an underlying fund can change in response to changes in prevailing interest rates, causing volatility and possible loss of value as rates increase. Bonds with longer maturities may lose more value due to interest rate increases than bonds with shorter maturities.
High Yield Securities Risk / Junk Bond Risk
The Fund's investments may include underlying funds that own high yield bonds. High yield bonds include convertible and non-convertible debt securities rated BBB or lower by Standard & Poor's Corporation, a division of The McGraw-Hill Companies, or Ba or lower by Moody's Investor Services, Inc., as well as securities that are not rated but are considered by the investment adviser to be of similar quality. High yield securities are commonly called “junk bonds.” The Fund's investment in underlying funds that own junk bonds entails a greater risk than an investment in higher-rated securities. High yield securities are predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligation. The market for high yield securities is generally less active than the market for higher quality securities. This may limit the ability of the underlying fund to sell high yield securities at the price at which they are being valued for purposes of calculating net asset value. Although junk bonds typically pay interest at higher rates than investment-grade bonds, there is a greater likelihood that the company issuing the junk bond will default on interest and principal payments.
Foreign and Emerging Markets Risk
To the extent the Fund invests in underlying funds that own foreign securities, including American Depositary Receipts (“ADRs”), the Fund may be subject to risks not usually associated with owning securities of U.S. issuers. These risks include adverse political, social and economic developments, differing auditing and legal standards, war, expropriation and nationalization. This also includes the risk that fluctuations in the exchange rates between the U.S. dollar and foreign currencies may negatively affect an investment. Adverse changes in exchange rates may erode or reverse any gains produced by foreign currency denominated investments and widen any losses. In addition, the costs of foreign investing, including withholding taxes, brokerage commissions, and custodial costs, generally are higher than for U.S. investments. Foreign issuers, brokers, and securities markets may also be subject to less government supervision than in the U.S. To the extent the Fund invests in underlying funds that own foreign fixed income securities, the Fund may be subject to risks not usually associated with owning securities of U.S. issuers. These risks include adverse political, social and economic developments, differing auditing and legal standards, war, expropriation and nationalization. To the extent the Fund invests in underlying funds that own fixed income securities in emerging markets, the
Prospectus 8
Fund will be subject to emerging market risks. The risks of foreign securities are typically increased in emerging markets. These risks include, among other things, political and economic instability, less developed securities markets and currency devaluations.
Convertible Securities Risk
To the extent that the Fund invests in underlying funds that own convertible securities, the Fund may be subject to additional risks. Convertible securities are fixed income securities, preferred stocks or other securities that are convertible into or exercisable for common stock of the issuer (or cash or securities of equivalent value) at either a stated price or a stated rate. The market values of convertible securities tend to decline as interest rates increase and, conversely, to increase as interest rates decline. A convertible security’s market value, however, tends to reflect the market price of the common stock of the issuing company when that stock price approaches or is greater than the convertible security’s “conversion price.” The conversion price is defined as the predetermined price at which the convertible security could be exchanged for the associated stock. As the market price of the underlying common stock declines, the price of the convertible security tends to be influenced more by the yield of the convertible security. Thus, it may not decline in price to the same extent as the underlying common stock. In the event of a liquidation of the issuing company, holders of convertible securities would be paid before the company’s common stockholders but after holders of any senior debt obligations of the company. Consequently, the issuer’s convertible securities generally entail less risk than its common stock but more risk than its debt obligations.
Synthetic convertible securities involve the combination of separate securities that possess the two principal characteristics of a traditional convertible security (i.e., an income-producing component and a right to acquire an equity security. Synthetic convertible securities are often achieved, in part, through investments in warrants or options to buy common stock (or options on a stock index), and therefore are subject to the risks associated with derivatives. The value of a synthetic convertible security will respond differently to market fluctuations than a traditional convertible security because a synthetic convertible is composed of two or more separate securities or instruments, each with its own market value. Because the convertible component is typically achieved by investing in warrants or options to buy common stock at a certain exercise price, or options on a stock index, synthetic convertible securities are subject to the risks associated with derivatives. In addition, if the value of the underlying common stock or the level of the index involved in the convertible component falls below the exercise price of the warrant or option, the warrant or option may lose all value.
Preferred Stock Risk
To the extent that the Fund invests in underlying funds that invest in shares of preferred stock, the Fund may be subject to additional risks. Preferred shares generally pay dividends at a specified rate and generally have preference over common shares in the payments of dividends and the liquidation of an issuer's assets. Shareholders may suffer a loss of value if dividends are not paid. Shareholders may experience a loss of value due to adverse interest rate movements or a decline in the issuer's credit rating.
Derivatives Risk
Certain underling funds may use derivatives in connection with their investment strategies. Derivatives may be riskier than other types of investments because they may be more sensitive to changes in economic or market conditions than other types of investments and could result in losses that significantly exceed the underlying fund's original investment. Derivatives are subject to the risk that changes in the value of a derivative may not correlate perfectly with the underlying asset, rate or index. The use of derivatives may not be successful, resulting in losses to the underlying fund, and the cost of such strategies may reduce the underlying fund's returns. Derivatives also expose the underlying fund to counterparty risk, including credit risk of the derivative counterparty. In addition, the underlying fund may use derivatives for non-hedging purposes, which increases the underlying fund's potential for loss. Investing in derivatives and engaging in short sales will result in a form of leverage. Leverage involves special risks. The underlying fund may be more volatile than if the underlying fund had not been leveraged because leverage tends to exaggerate the effect of any increase or decrease in the value of the underlying fund's portfolio securities.
Prospectus 9
Short Selling Risk
Some of the underlying funds may enter into short sales of certain securities and must borrow the securities to make delivery to the buyer. The underlying fund may not always be able to borrow a security it wants to sell short. The underlying fund also may be unable to close out an established short position at an acceptable price, and may have to sell securities it owns at disadvantageous times to cover its short positions. Furthermore, taking short positions in securities results in a form of leverage. Leverage involves special risks described below. A underlying fund's loss on a short sale is potentially unlimited because there is no upward limit on the price a borrowed security could attain.
Inverse and Leverage Risk
To the extent that the Fund invests in underlying funds that employ inverse and leverage investment strategies, the Fund may be subject to additional risks. An inverse underlying fund seeks to deliver the opposite performance of an index, thus the Fund may incur a loss as a result of a investing in an underlying fund that is inversely positioned if the price of the underlying fund’s short position instruments increase. The underlying fund's losses are potentially unlimited in a short position transaction. A leveraged underlying fund seeks to deliver multiples of the performance of the index or benchmark it tracks. Leverage causes the value of the underlying fund’s shares to be more volatile than if the underlying fund did not use leverage. The compounding effect of a security’s returns has a significant impact on all types of investments. As a result of compounding, inverse and leveraged underlying funds may have additional risks. An inverse underlying fund’s performance for periods greater than one day is likely to be either greater than or less than the inverse of the index performance as stated in the underlying fund’s objective. Similarly, a leveraged underlying fund’s performance for periods greater than one day is likely to be either greater than or less than the index performance times the stated multiple in the underlying fund’s objective. This effect becomes more pronounced for these types of underlying funds as market volatility increases. Investments by the Fund in inverse and leveraged underlying funds may magnify changes in the Fund’s share price and thus result in increased volatility of returns. These types of investments may prevent the Fund from achieving its investment objective.
Portfolio Turnover
The Fund may engage in short-term trading to try to achieve its objective and may have portfolio turnover rates significantly in excess of 100%. Increased portfolio turnover may cause the Fund to incur higher transaction costs and brokerage costs, which may adversely affect the Fund's performance, and may produce increased taxable distributions.
Sector Risks
Sector risk is the possibility that securities within the same group of industries will decline in price due to sector-specific market or economic developments. The Fund may invests a significant portion of its total assets in underlying funds that hold fixed income securities. Securities in the same sector are likely to react similarly to interest rate changes, adverse legislative or regulatory changes, adverse market conditions, and/or increased competition affecting that market segment.
Investment Management Risk
The Sub-Adviser's strategy may fail to produce the intended results. In addition, the Sub-Adviser has not previously managed a mutual fund.
Risk of Non-Diversification
The Fund is a “non-diversified” portfolio, which means that it has the ability to take larger positions in a smaller number of securities than a portfolio that is “diversified.” Non-diversification increases the risk that the value of the Fund could go down because of the poor performance of a single investment. The Fund may invest in underlying funds that are non-diversified. A non-diversified fund has the ability to take larger positions in a smaller number of securities than a portfolio that is “diversified.” Investing in non-diversified funds may result in greater volatility.
Prospectus 10
Portfolio Holdings Disclosure
A description of the Fund's policies and procedures with respect to the disclosure of the Fund's portfolio securities is available in the Fund's Statement of Additional Information (“SAI”).
Management
The Investment Adviser
Neiman Funds Management LLC is the investment adviser of the Fund and has responsibility for the management of the Fund’s affairs, under the supervision of the Trust's Board of Trustees. The Adviser was organized in 2009. The Adviser serves as investment adviser to the Neiman Funds. The address of the Adviser is 6631 Main Street, Williamsville, NY 14221.
The Adviser manages the investment portfolio of the Fund, subject to the policies adopted by the Trust's Board of Trustees. Under the Management Agreement, the Adviser, at its own expense and without reimbursement from the Trust, furnishes office space and all necessary office facilities, equipment and executive personnel necessary for managing the Fund. The Adviser receives an annual investment management fee of 1.00% of the average daily net assets of the Fund. For the fiscal period ended March 31, 2013, the Adviser received management fees, after management fee waivers, of 0.79% of the daily net assets of the Fund. The Adviser has agreed to waive management fees and reimburse expenses to the extent necessary to maintain total annual operating expenses of the Fund (excluding brokerage fees and commissions, interest and other borrowing expenses, taxes, indirect expenses (such as expenses of other investment companies in which the Fund invests) and extraordinary expenses) at 1.45% for Class A Shares of their average daily net assets through July 31, 2014.
A discussion regarding the basis of the Board of Trustees' approval of the Management Agreement between the Trust and Neiman Funds Management LLC is available in the Fund's most recent semi-annual report to shareholders dated September 30, 2012.
The Fund has adopted a Distribution Plan under Rule 12b-1 that allows it to pay distribution and other fees for the sale and distribution of its shares and for services provided to shareholders. To the extent that the Distribution Plan under Rule 12b-1 does not cover these cost, the Adviser (not the Fund) may pay certain financial institutions (which may include banks, brokers, securities dealers and other industry professionals) a fee for providing distribution related services and/or for performing certain administrative servicing functions for Fund shareholders to the extent these institutions are allowed to do so by applicable statute, rule or regulation. The Fund may from time to time purchase securities issued by financial institutions that provide such services; however, in selecting investments for the Fund, these services will not be taken into consideration.
The Sub-Adviser
PageOne Funds Management, LLC serves as the sub-adviser of the Fund. The Sub-Adviser makes the day-to-day investment decisions and continuously reviews, supervises and administers the Fund's investment program. The Sub-Adviser was organized in 2012, and its address is 2537 Rt. 9, Suite 205, Malta, NY 12020. The Fund's investment portfolio is managed on a day-to-day basis by Edgar R. Page, Joseph Arena, and Kyle Webber.
Edgar R. Page
Ed Page is Lead Portfolio Manager of the Fund. He is also the Chairman of the investment committee, Founder, Chairman and CEO of the Sub-Adviser since it began operations in 2012 and Chairman and Chief Executive Officer of PageOne Financial, Inc., an affiliated investment adviser. As Chairman and CEO, Mr. Page oversees all investment and strategic initiatives for the two firms. As of June 30, 2013, PageOne Financial, Inc. managed over $202 million in discretionary client
Prospectus 11
assets and over $20 million of assets under advisement. A native of New York State, Mr. Page attended Cornell University and Marist Graduate School. Mr. Page formed PageOne Financial, Inc. in 1984, following a number of years as a registered representative with a major Wall Street firm.
Joseph Arena Portfolio Manage
r
Joseph Arena is a portfolio manager for the Fund. He is also President, Chief Market Strategist, and Senior Portfolio Manager of PageOne Financial, Inc. Mr. Arena has been a member of PageOne Financial, Inc.’s investment team since 2004, becoming the firm's Chief Market Strategist in 2007. As a member of the investment committee since 2004, Mr. Arena leads the research efforts of the firm and aides in the design, analysis and implementation of the firm's strategies. Mr. Arena received his Bachelor of Science in Management with a Concentration in Finance from Binghamton University.
Kyle Webber
Assistant Portfolio Manager
Kyle Webber is an assistant portfolio manager for the Fund. He is also Executive Vice President, Chief Compliance Officer and Portfolio Manager of PageOne Financial, Inc. and Chief Compliance Officer for the Sub-Adviser. As a member of PageOne Financial, Inc.’s investment committee, Mr. Webber aides in the design, analysis and implementation of the firm's strategies. Prior to joining PageOne Financial, Inc., he was the Chief Research Analyst to a boutique investment management firm headquartered in Seattle, WA (November 2008 to May 2011). He was a regional sales manager from 2007 to November 2008 with Xtralis, Inc. Mr. Webber launched his career with John Hancock Funds where he amassed experience in portfolio management and business development. Mr. Webber earned his Bachelor of Science in Financial Information & Analysis from Clarkson University. Mr. Webber sits on boards and committees for several non-profits.
The Fund's Statement of Additional Information provides information about the portfolio manager's compensation, other accounts managed by the portfolio manager, and the portfolio manager's ownership of Fund shares.
Shareholder Information
Pricing of Fund Shares
The price you pay for a share of the Fund, and the price you receive upon selling or redeeming a share of the Fund, is called the Fund’s net asset value (“NAV”). A separate NAV is calculated for each share class of the Fund. The NAV for a class is calculated by adding the total value of the Fund's investments and other assets allocable to a class, subtracting the liabilities allocable to that class and then dividing that figure by the number of outstanding shares of the class:
Net Asset Value = Total Assets(Class) - Liabilities(Class) / Number of Shares Outstanding (Class)
The NAV is generally calculated as of the close of trading on the New York Stock Exchange (normally 4:00 p.m. Eastern time) every day the Exchange is open. The New York Stock Exchange is generally open every day other than weekends and holidays. All purchases, redemptions or reinvestments of Fund shares will be priced at the next NAV calculated after your order is received in proper form by the Fund’s Transfer Agent, Mutual Shareholder Services. If you purchase shares directly from the Fund, your order must be placed with the Transfer Agent prior to the close of the trading of the New York Stock Exchange in order to be confirmed for that day’s NAV. The NAV of the Fund is calculated based on the reported NAV of the various underlying funds in which the Funds invest. Certain short-term securities are valued at amortized cost, which approximates market value. The market value of an underlying fund's investments is determined primarily on the basis of readily available market quotations for the underlying fund's portfolio securities. The prospectuses for the underlying funds explain the circumstances under which those companies will use fair value pricing and the effects of using fair value pricing. If market prices are not available or, in the Adviser's opinion, market prices
Prospectus 12
do not reflect fair value, or if an event occurs after the close of trading (but prior to the time the NAV is calculated) that materially affects fair value, the Adviser may value the Fund's assets at their fair value according
to policies approved by the Fund's Board of Trustees. For example, if trading in a portfolio security is halted and does not resume before the Fund calculates its NAV, the Adviser may need to price the security using the Fund's fair value pricing
guidelines. Without a fair value price, short term traders could take advantage of the arbitrage opportunity and dilute the NAV of long term investors. Fair valuation of a Fund's portfolio securities can serve to reduce arbitrage opportunities
available to short term traders, but there is no assurance that fair value pricing policies will prevent dilution of the Fund's NAV by short term traders. Fair valuation involves subjective judgements and it is possible that the fair value
determined for a security may differ materially from the value that could be realized upon the sale of the security. The Fund may use pricing services to determine market value.
How to Purchase Shares
You may purchase shares directly through the Fund's transfer agent or through a brokerage firm or other financial institution that has agreed to sell the Fund's shares. If you are investing directly in the Fund for the first
time, you will need to establish an account by completing a Shareholder Account Application (To establish an IRA, complete an IRA Application). To request an application, call toll-free 1-877-385-2720. Your initial investment minimum can be found in
the table below. The Fund reserves the right to change the amount of these minimums from time to time or to waive them in whole or in part for certain accounts. Investment minimums may be higher or lower to investors purchasing shares through a
brokerage firm or other financial institution. The Fund reserves the right to waive sales charges.
Purchases Through Financial Intermediaries
You may make initial and subsequent purchases of shares of the Fund through a financial intermediary, such as an investment adviser or broker-dealer, bank or other financial institution that purchases shares for its customers.
Before investing in the Fund through a financial intermediary, you should read carefully any materials provided by the intermediary together with this prospectus.
If you invest through a brokerage firm or other financial institution, the policies and fees may be different than those described in this prospectus. Financial advisers, financial supermarkets, brokerage firms, and other
financial institutions may charge transaction and other fees and may set different minimum investments or limitations on buying or selling shares. Consult a representative of your financial institution if you have any questions.
When shares are purchased this way, the financial intermediary may:
-
charge a fee for its services;
-
act as the shareholder of record of the shares;
-
set different minimum initial and additional investment requirements;
-
impose other charges and restrictions;
-
designate intermediaries to accept purchase and sale orders on the Fund's behalf; or
-
impose an earlier cut-off time for purchase and redemption requests.
The Fund considers a purchase or sale order as received when a financial intermediary receives the order in proper form before 4:00 p.m. Eastern Time. These orders will be priced based on the Fund's NAV, plus any applicable
sales charge, next computed after such order is received by the financial intermediary. It is the responsibility of the financial intermediary to transmit properly completed purchase orders to the Fund in a timely manner.
Shares held through an intermediary may be transferred into your name following procedures established by your intermediary and the Fund. Certain intermediaries may receive compensation from the Fund, the Adviser or their
affiliates.
Prospectus 13
Fund Direct Purchases
You may also purchase shares directly through the Fund’s transfer agent. Your purchase order will be priced based on the Fund’s NAV, plus any applicable sales charge, next computed after your order is received by the Fund. If you are investing directly in the Fund for the first time, you will need to establish an account by completing a Shareholder Account Application (To establish an IRA, complete an IRA Application). To request an application, call toll-free 1-877-385-2720. Your initial investment minimum can be found in the table below. The Fund reserves the right to change the amount of these minimums from time to time or to waive them in whole or in part for certain accounts. Investment minimums may be higher or lower to investors purchasing shares through a brokerage firm or other financial institution.
Customer Identification Program
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. This means that, when you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask for identifying documents, and may take additional steps to verify your identity. We may not be able to open an account or complete a transaction for you until we are able to verify your identity.
Sales Charges
Shares of the Fund are purchased at their NAV plus any applicable sales charge. This is known as the public offering price.
The Fund's Distributor compensates financial intermediaries, including processing organizations, who sell shares of the Funds. Compensation comes from sales charges, Rule 12b-1 fees and payments by the Adviser.
To obtain free information regarding sales charges and the reduction or elimination or waiver of sales charges on Class A shares, visit www.neimanfunds.com or call 1-877-385-2720. You also may contact your financial intermediary.
Class A Shares
The public offering price for Class A shares of the Fund is the next determined NAV plus a sales charge, unless you qualify for a waiver of the sales charge. The table below shows the amount of sales charge you would pay at different levels of investment and the commissions paid to financial intermediaries at each level of investment.
|
|
Sales Charge as a % of
|
|
|
|
|
|
Public
|
|
Net
|
|
Financial
|
|
|
|
Offering
|
|
Amount
|
|
Intermediary
|
|
|
|
Price
|
|
Invested
|
|
Commission
1
|
|
|
Amount of Investment
|
|
|
|
|
|
|
|
Less than $50,000
|
5.75%
|
|
6.10%
|
|
5.00%
|
|
|
$50,000 but less than $100,000
|
4.50%
|
|
4.71%
|
|
3.75%
|
|
|
$100,000 but less than $250,000
|
3.75%
|
|
3.90%
|
|
3.00%
|
|
|
$250,000 but less than $500,000
|
3.00%
|
|
3.09%
|
|
2.50%
|
|
|
$500,000 but less than $1,000,000
|
2.00%
|
|
2.04%
|
|
1.50%
|
|
|
$1,000,000 or more
|
None
|
|
None
|
|
None
|
|
|
1
As a percentage of the public offering price.
|
|
|
|
|
|
|
Prospectus 14
The Adviser may make a payment to financial intermediaries for your cumulative investments of $1 million or more of Class A shares. However, if you purchase $1 million or more of Class A shares of the Fund and are not
assessed a sales charge at the time of purchase, you may be charged the equivalent of up to 1.00% of the amount invested if you redeem any or all of the Class A shares of a Fund during the first 18 months after purchase. This charge applies to all
your purchases. See the Statement of Additional Information for more details.
The Fund permits you to reduce the initial sales charge you pay on Class A shares by using the Right of Accumulation or a Letter of Intent. Each of these methods for reducing the initial sales charge on Class A shares is
described below. In taking advantage of these methods for reducing the initial sales charge you will pay, you may link your purchases of shares with purchases of shares in accounts owned by your spouse or children under the age of 21 who share your
residential address. It is your responsibility when investing to inform your Financial Intermediary or the Funds that you would like to have one or more accounts linked together for purposes of reducing the initial sales charge.
Right of Accumulation:
You may qualify for a reduction in the initial sales charge for future purchases of Class A shares based on the current market value of your Class A holdings
from prior purchases through the Right of Accumulation. To calculate the sales charge applicable to your net purchase of Class A shares, you may aggregate your investment with the current market value of any Class A shares of the Fund held
in:
|
1.
|
Your account(s);
|
|
|
|
2.
|
Your spouse's account(s);
|
|
|
|
3.
|
Joint accounts with qualified spouse;
|
|
|
|
4.
|
Account(s) of children under the age of 21 who share your residential address;
|
|
|
|
5.
|
Trust accounts established by any of the individuals in items (1) through (3) above. If the person(s) who established the trust is deceased, the trust account may be aggregated with the account(s) of the primary beneficiary of
the trust;
|
|
|
|
6.
|
Solely controlled business accounts; and
|
|
|
|
7.
|
Single-participant retirement plans of any of the individuals in items (1) through (3) above.
|
|
|
In order to obtain any reduction in the initial sales charge, you must, before purchasing Class A shares, inform the Fund or your Financial Intermediary if you have any of the above types of accounts that can be aggregated with
your current investment in Class A shares to reduce the applicable sales charge. In order to verify your eligibility for a reduced sales charge, you may be required to provide appropriate documentation, such as an account statement or the social
security or tax identification number on an account, so that the Fund may verify (1) the number of shares of the Fund held in your account(s) with the Fund, (2) the number of shares of the Fund held in your account(s) with a Financial Intermediary,
and (3) the number of shares of the Fund held in an account with a Financial Intermediary owned by your spouse or by children under the age of 21 who share your residential address.
Letter of Intent:
You may purchase Class A shares at the sales charge rate applicable to the total amount of the purchases you intend to make over a 13-month period. The Fund will
combine the value of your current purchases with the current value of any Class A shares you purchased previously for (i) your account, (ii) your spouse's account, (iii) a joint account with your spouse, or (iv) your minor children's trust or
custodial accounts. In calculating the total amount of purchases, you may include in your letter purchases made up to 90 days before the date of the Letter of Intent. A fiduciary purchasing shares for the same fiduciary account, trust or estate may
also consider the value of Class A shares purchased previously that were sold subject to a sales charge. In other words, a Letter of Intent allows you to purchase Class A shares of the Fund over a 13-month period and receive the same sales charge as
if you had purchased all the shares at the same time. The Fund will also consider the value of Class A shares sold at NAV. Class A shares purchased with dividends or distributions will not be included in the calculation. To be entitled to a reduced
sales charge on the purchase of Class A shares based on shares you intend to purchase over the 13-month period, you
Prospectus 15
must send the Fund a Letter of Intent. The 13-month period begins on the date of the first purchase, including those purchases made in the 90-day period before the date of the Letter of Intent. Please note that the purchase price of these prior purchases will not be adjusted.
You are not legally bound by the terms of your Letter of Intent to purchase the amount of shares stated in the Letter of Intent. The Letter of Intent does, however, authorize the Fund to hold in escrow 5.00% of the total amount you intend to purchase. If you do not complete the total intended purchase of Class A shares at the end of the 13-month period, the Fund's transfer agent will redeem the necessary portion of the escrowed shares to make up the difference between the reduced sales charge rate (based on the amount you intended to purchase) and the sales charge rate that would normally apply (based on the actual amount you purchased).
Additional information regarding the reduction of Class A sales charges is available in the Fund's Statement of Additional Information. To take advantage of the Right of Accumulation and/or a Letter of Intent, contact the Fund or your Financial Intermediary. To determine if you are eligible for these programs or to request a copy of the Statement of Additional Information, call 1-877-385-2720 between the hours of 8:30 a.m. and 5:00 p.m. Eastern Time on days the Fund is open for business. These programs may be terminated or amended at any time.
Sales Charge Waivers
Sales charges may be waived and no sales charge is imposed on Class A shares of the Fund if the shares were:
1. Bought by officers, directors or trustees, and employees and their immediate family members (i.e., spouses, children, grandchildren, parents, grandparents and any dependent of the person, as defined in section 152 of the Internal Revenue Code) of:
• Neiman Funds;
• Neiman Funds Management LLC and its subsidiaries and affiliates;
• PageOne Funds Management, LLC and its subsidiaries and affiliates;
• The Distributor and its subsidiaries and affiliates; or
• Broker-dealers or financial institutions that have entered into dealer agreements with the Funds or their principal underwriter and their subsidiaries and affiliates (or otherwise have an arrangement with a broker-dealer or financial institution with respect to sales of Fund shares).
2. Bought by advisory clients of Neiman Funds Management LLC and its subsidiaries and affiliates or bought by advisory clients of PageOne Funds Management, LLC and its subsidiaries and affiliates.
3. Bought by certain retirement and deferred compensation plans, and trusts used to fund those plans, including, but not limited to, those plans qualified under sections 401(k), 403(b) or 457 of the Internal Revenue Code and “rabbi trusts.”
4. Bought by financial intermediaries who have a dealer arrangement with the Distributor, who place trades for their own accounts or for the accounts of their clients and who charge a management, asset allocation, consulting or other fee for their services, or clients of such financial intermediaries who place trades for their own accounts if the accounts are linked to the master account of such Financial Intermediary.
5. Bought by an investment adviser, broker-dealer or financial planner, provided arrangements are pre-approved.
6. Bought by a bank, trust company or thrift institution which is acting as a fiduciary exercising investment discretion, provided that appropriate notification of such a fiduciary relationship is reported at the time of the investment to the Fund or the Fund's Distributor.
Prospectus 16
7. Bought by employer-sponsored health savings accounts.
8. Bought with proceeds from the sale of Class A shares of the Fund, but only if the purchase is made within 90 days of the sale or distribution. Appropriate documentation may be required. Exercising the reinvestment privilege will not affect the character of any gain or loss realized on the redemption for federal income tax purposes, except that if the redemptions resulted in a loss, the reinvestment may result in the loss being disallowed under the “wash sale” rules.
9. Bought in connection with plans of reorganizations of the Fund, such as mergers, asset acquisitions and exchange offers to which the Fund is a party.
10. Bought by a “charitable organization” as defined for purposes of Section 501(c)(3) of the Internal Revenue Code, or by a charitable remainder trust or life income pool established for the benefit of a charitable organization.
To take advantage of any of these sales charge waivers, you must qualify for such waiver. To see if you qualify, call 1-877-385-2720 between the hours of 8:30 a.m. and 5:00 p.m. Eastern Time on days the Funds are open for business or contact your Financial Intermediary. These waivers may not continue indefinitely and may be discontinued at any time without notice.
Rule 12b-1 Fees
The Fund has adopted a Distribution Plan under Rule 12b-1 that allows it to pay distribution and other fees for the sale and distribution of its shares and for services provided to shareholders. These fees are called “Rule 12b-1 fees.” Rule 12b-1 fees are paid by the Fund to the Distributor as compensation for its services and expenses in connection with the distribution of Fund shares. The Distributor may pay any or all amounts received under the Rule 12b-1 Plan to other persons, including the Adviser, for any distribution, promotional or shareholder support services. Class A shares pay an annual Rule 12b-1 fee equal to 0.25% of the average daily net assets attributable to Class A shares. Up to 0.25% of the 12b-1 fee may be used as a shareholder servicing fee. Because these fees are paid out of the Fund's assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
Minimum Investments
|
|
|
Initial
|
|
Additional
|
|
|
Regular Account
|
$
|
2,500
|
|
$100
|
|
|
Automatic Investment Plan
|
$
|
1,000
|
|
$100
|
*
|
|
IRA Account
|
$
|
1
,000
|
|
$100
|
|
*An Automatic Investment Plan requires a $100 minimum automatic monthly or quarterly investment.
All purchases must be made in U.S. dollars and checks must be drawn on U.S. banks. No cash, money orders, travelers checks, credit cards, credit card checks, third party checks or other checks deemed to be high-risk checks will be accepted. A $20 fee will be charged against your account for any payment check returned to the transfer agent or for any incomplete electronic fund transfer, or for insufficient funds, stop payment, closed account or other reasons. If a check does not clear your bank or the Fund is unable to debit your predesignated bank account on the day of purchase, the Fund reserves the right to cancel the purchase. If your purchase is canceled, you will be responsible for any losses or fees imposed by your bank and losses that may be incurred as a result of a decline in the value of the canceled purchase. The Fund (or Fund agent) has the authority to redeem shares in your account(s) to cover any losses due to fluctuations in share price. Any profit on such cancellation will accrue to the Fund. Your investment in the Fund should be intended to serve as a long-term investment vehicle. The Fund is not designed to provide you with a means of speculating on the short-term fluctuations in the stock market. The Fund reserves the right to reject any purchase request that it regards as disruptive to the efficient management of the Fund, which includes investors with a history of excessive trading. The Fund also reserves the right to stop offering shares at any time.
Types of Account Ownership
You can establish the following types of accounts by completing a Shareholder Account Application:
•
Individual or Joint Ownership
Individual accounts are owned by one person. Joint accounts have two or more owners.
•
A Gift or Transfer to Minor
(UGMA or UTMA)
A UGMA/UTMA account is a custodial account managed for the benefit of a minor. To open an UGMA or UTMA account, you must include the minor’s social security number on the application.
•
Trust
An established trust can open an account. The names of each trustee, the name of the trust and the date of the trust agreement must be included on the application.
•
Business Accounts
Corporation and partnerships may also open an account. The application must be signed by an authorized officer of the corporation or a general partner of a partnership.
•
IRA Accounts
See “Tax-Deferred Plans” on page 19.
Instructions For Opening and Adding to an Account
TO OPEN AN ACCOUNT
By Mail
Complete and sign the Shareholder Application or an IRA Application
Make your check payable to Neiman Tactical Income Fund • For IRA accounts, please specify the year for which the contribution is made.
Mail the application and check to:
Neiman Tactical Income Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
|
By overnight courier, send to:
Neiman Tactical Income Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
|
TO ADD TO AN ACCOUNT
By Mail
Complete the investment slip that is included with your account statement, and write your account number on your check. If you no longer have your investment slip, please reference your name, account number, and address on your check.
Mail the slip and the check to:
Neiman Tactical Income Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
|
Prospectus 18
TO OPEN AN ACCOUNT
By Wire
Call 1-877-385-2720 for instructions and and to obtain an investor account number or an IRA account number prior to wiring to the Fund.
TO ADD TO AN ACCOUNT
By Wire
Call 1-877-385-2720 for instructions.
Telephone and Wire Transactions
With respect to all transactions made by telephone, the Fund and its transfer agent will employ reasonable procedures to confirm that instructions communicated by telephone are genuine. Such procedures may include, among others, requiring some form of personal identification prior to acting upon telephone instructions, providing written confirmation of all such transactions, and/or tape recording all telephone instructions. If reasonable procedures are followed, then neither the Fund nor the transfer agent will be liable for any loss, cost, or expense for acting upon an investor's telephone instructions or for any unauthorized telephone redemption. In any instance where the Fund’s transfer agent is not reasonably satisfied that instructions received by telephone are genuine, neither the Fund nor the transfer agent shall be liable for any losses which may occur because of delay in implementing a transaction.
If you purchase your initial shares by wire, the transfer agent first must have received a completed account application and issued an account number to you. The account number must be included in the wiring instructions as set forth on the previous page. The transfer agent must receive your account application to establish shareholder privileges and to verify your account information. Payment of redemption proceeds may be delayed and taxes may be withheld unless the Fund receives a properly completed and executed account application.
Shares purchased by wire will be purchased at the NAV (plus any applicable sales charge) next determined after the transfer agent receives your wired funds and all required information is provided in the wire instructions. If the wire is not received by 4:00 p.m. Eastern time, the purchase will be effective at the NAV next calculated after receipt of the wire.
Tax-Deferred Plans
If you are eligible, you may set up one or more tax-deferred accounts. A tax-deferred account allows you to shelter your investment income and capital gains from current income taxes. A contribution to certain of these plans may also be tax deductible. Tax-deferred accounts include retirement plans described below. Distributions from these plans are generally subject to an additional tax if withdrawn prior to age 59 1/2 or used for a nonqualifying purpose. Investors should consult their tax adviser or legal counsel before selecting a tax-deferred account.
US Bank N.A.
, serves as the custodian for the tax-deferred accounts offered by the Fund. You will be charged an annual account maintenance fee of $8 for each tax-deferred account you have with the Fund. You may pay the fee by check or have it automatically deducted from your account (usually in December). The custodian reserves the right to change the amount of the fee or to waive it in whole or part for certain types of accounts.
Types of Tax-Deferred Accounts
• Traditional IRA
An individual retirement account. Your contribution may or may not be deductible depending on your circumstances. Assets can grow tax-deferred and distributions are taxable as income.
Prospectus 19
• Roth IRA
An IRA with non-deductible contributions, tax-free growth of assets, and tax-free distributions for qualified distributions.
• Spousal IRA
An IRA funded by a working spouse in the name of a non-earning spouse.
• SEP-IRA
An individual retirement account funded by employer contributions. Your assets grow tax-deferred and distributions are taxable as income.
• Keogh or Profit Sharing Plans
These plans allow corporations, partnerships and individuals who are self-employed to make tax-deductible contributions of up to $35,000 for each person covered by the plans.
• 403(b) Plans
An arrangement that allows employers of charitable or educational organizations to make voluntary salary reduction contributions to a tax-deferred account.
• 401(k) Plans
Allows employees of corporations of all sizes to contribute a percentage of their wages on a tax-deferred basis. These accounts need to be established by the trustee of the plan.
Automatic Investment Plans
By completing the Automatic Investment Plan section of the account application, you may make automatic monthly or quarterly investments ($100 minimum per purchase) in the Fund from your bank or savings account. Your initial
investment minimum is $250 if you select this option. Shares of the Fund may also be purchased through direct deposit plans offered by certain employers and government agencies. These plans enable a shareholder to have all or a portion of his or
her payroll or Social Security checks transferred automatically to purchase shares of the Fund.
FOR INVESTING
Automatic Investment Plan
For making automatic investments from a designated bank account.
Payroll Direct Deposit Plan
For making automatic investments from your payroll check.
Dividend Reinvestment
All income dividends and capital gains distributions will be automatically reinvested in shares of the Fund unless you indicate otherwise on the account application or in writing.
Instructions For Selling Fund Shares
You may sell all or part of your shares on any day that the New York Stock Exchange is open for trading. Your shares will be sold at the next NAV per share calculated after your order is received in proper form by the transfer
agent. The proceeds of your sale may be more or less than the purchase price of your shares, depending on the market value of the Fund's securities at the time of your sale. Your order will be processed promptly and you will generally receive the
proceeds within seven days after receiving your properly completed request. The Fund will not mail any proceeds unless your investment check has cleared the bank, which may take up to fifteen calendar days. This procedure is intended to protect the
Fund and its shareholders from loss. If the dollar or share amount request-
Prospectus 20
ed is greater than the current value of your account, your entire account balance will be redeemed. If you choose to redeem your account in full, any automatic services currently in effect for the account will be terminated unless you indicate otherwise in writing.
TO SELL SHARES
By Mail
Write a letter of instruction that includes:
-
The names(s) and signature(s) of all account owners.
-
Your account number.
-
The dollar or share amount you want to sell.
-
Where to send the proceeds.
-
If redeeming from your IRA, please note applicable withholding requirements.
-
Obtain a signature guarantee or other documentation, if required.
Mail your request to:
Neiman Tactical Income Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
|
By overnight courier, send to:
Neiman Tactical Income Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
|
By Telephone
-
You will automatically be granted
telephone redemption privileges
unless you decline them in writing
or indicate on the appropriate sec-
tion of the account application that
you decline this option. Otherwise,
you may redeem Fund shares by
calling 1-877-385-2720. Redemption
proceeds will only be mailed to your
address of record.
-
You may only redeem a maximum of
$25,000 per day by telephone.
-
You will not be able to redeem by
telephone and have a check sent to
your address of record for a period of
15 days following an address change.
-
Unless you decline telephone
privileges in writing or on your
account application, as long as the
Fund takes reasonable measures to
verify the order, you may be respon-
sible for any fraudulent telephone order.
For specific information on how to redeem your account, and to determine if a signature guarantee or other documentation is required, please call toll-free in the U.S.1-877-385-2720.
Additional Redemption Information
Signature Guarantees
Signature guarantees are designed to protect both you and the Fund from fraud. A signature guarantee of each owner is required to redeem shares in the following situations:
-
If you change ownership on your account.
-
If a change of address request has been received by the transfer agent within the last 15 days.
-
If you wish to redeem $25,000 or more from any shareholder account.
Signature guarantees can be obtained from most banks, savings and loan associations, trust companies, credit unions, broker/dealers, and member firms of a national securities exchange. Call your financial institution to see if they have the ability to guarantee a signature.
A notary public cannot provide signature guarantees.
The Fund reserves the right to require a signature guarantee under other circumstances or to delay a redemption when permitted by Federal Law. For more information pertaining to signature guarantees, please call 1-877-385-2720.
Corporate, Trust and Other Accounts
Redemption requests from corporate, trusts, and other accounts may require documents in addition to those described above, evidencing the authority of the officers, trustees or others. In order to avoid delays in processing redemption requests for these accounts, you should call the transfer agent at 1-877-385-2720 to determine what additional documents are required.
Address Changes
To change the address on your account, call the transfer agent at 1-877-385-2720 or send a written request signed by all account owners. Include the account number(s) and name(s) on the account and both the old and new addresses. Certain options may be suspended for a period of 15 days following an address change.
Transfer of Ownership
In order to change the account registration or transfer ownership of an account, additional documents will be required. In order to avoid delays in processing these requests, you should call the transfer agent at 1-877-385-2720 to determine what additional documents are required.
Redemption Initiated by the Fund
Because there are certain fixed costs involved with maintaining your account, the Fund may require you to redeem all of your shares if your account balance falls below $500. After your account balance falls below the minimum balance, you will receive a notification from the Fund indicating its intent to close your account along with instructions on how to increase the value of your account to the minimum amount within 60 days. If your account balance is still below $500 after 60 days, the Fund may close your account and send you the proceeds. This minimum balance requirement does not apply to accounts using automatic investment plans, to IRAs, and to other tax-sheltered investment accounts. The right of redemption by the Fund will not apply if the value of your account balance falls below $500 because of market performance. All shares of the Fund are also subject to involuntary redemption if the Board of Trustees determines to liquidate the Fund. Any involuntary redemption will create a capital gain or loss, which may have tax consequences about which you should consult your tax adviser.
Shareholder Communications
Account Statements
Every quarter, shareholders of the Fund will automatically receive regular account statements. You will also be sent a yearly statement detailing the tax characteristics of any dividends and distributions you have received.
Confirmations
Confirmation statements will be sent after each transaction that affects your account balance or account registration.
Regulatory Mailings
Financial reports will be sent at least semiannually. Annual reports will include audited financial statements. To reduce expenses, one copy of each report will be mailed to each taxpayer identification number even though the investor may have more than one account in the Fund.
Dividends and Distributions
The Fund intends to pay distributions on an annual basis and expects that distributions will consist primarily of capital gains. You may elect to reinvest income dividends and capital gain distributions in
Prospectus 22
the form of additional shares of the Fund or receive these distributions in cash. Dividends and distributions from the Fund are automatically reinvested in the Fund, unless you elect to have dividends paid in cash. Reinvested dividends and distributions receive the same tax treatment as those paid in cash. If you are interested in changing your election, you may call the transfer agent at 1-877-385-2720 or send a written notification to:
Neiman Tactical Income Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
Market Timing
|
The Fund discourages market timing. Market timing is an investment strategy using frequent purchases, redemptions and/or exchanges in an attempt to profit from short term market movements. Market timing may result in dilution of the value of Fund shares held by long term shareholders, disrupt portfolio management and increase Fund expenses for all shareholders. The Board of Trustees has adopted a policy directing the Fund to reject any purchase order with respect to one investor, a related group of investors or their agent(s), where it detects a pattern of purchases and sales of the Fund that indicates market timing or trading that it determines is abusive. This policy generally applies to all Fund shareholders. While the Fund attempts to deter market timing, there is no assurance that it will be able to identify and eliminate all market timers. For example, certain accounts called “omnibus accounts” include multiple shareholders. Omnibus accounts typically provide the Fund with a net purchase or redemption request on any given day where purchasers of Fund shares and redeemers of Fund shares are netted against one another and the identity of individual purchasers and redeemers whose orders are aggregated are not known by the Fund. The netting effect often makes it more difficult for the Fund to detect market timing, and there can be no assurance that the Fund will be able to do so.
Taxes
Fund dividends and distributions are taxable to most investors (unless your investment is in an IRA or other tax-advantaged account). Dividends paid by the Fund out of net ordinary income and distributions of net short-term capital gains are taxable to the shareholders as ordinary income.
Distributions by the Fund of net long-term capital gains to shareholders are generally taxable to the shareholders at the applicable long-term capital gains rate, regardless of how long the shareholder has held shares of the Fund.
Redemptions of shares of the Fund are taxable events which you may realize as a gain or loss. The amount of the gain or loss and the rate of tax will depend mainly upon the amount paid for the shares, the amount received from the sale, and how long the shares were held.
The Fund’s distributions may be subject to federal income tax whether received in cash or reinvested in additional shares. In addition to federal taxes, you may be subject to state and local taxes on distributions.
For taxable years beginning after December 31, 2012, an additional 3.8% Medicare tax may be imposed on distributions you receive from the Fund and on gains from selling, redeeming or exchanging your shares.
Because everyone’s tax situation is unique, always consult your tax professional about federal, state, and local tax consequences of an investment in the Fund.
Prospectus 23
Other Fund Service Providers
Custodian
US Bank N.A.
Distributor
Rafferty Capital Markets, LLC
Fund Administrator
Premier Fund Solutions, Inc.
Independent Registered Public Accounting Firm
Cohen Fund Audit Services, Ltd.
Investment Adviser
Neiman Funds Management LLC
Investment Sub-Adviser
PageOne Funds Management, LLC
Legal Counsel
Thompson Hine LLP
Transfer Agent
Mutual Shareholder Services, LLC
The following is a description of the Fund's policies regarding disclosure of nonpublic personal information that you provide to the Fund or that the Fund collects from other sources. In the event that you hold shares of the Fund through a broker-dealer or other financial intermediary, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared with unaffiliated third parties.
Categories of Information the Fund Collects
. The Fund collects the following non-public personal information about you:
• Information the Fund receives from you on or in applications or other forms, correspondence, or conversations (such as your name, address, phone number, social security number, assets, income and date of birth); and
• Information about your transactions with the Fund, its affiliates, or others (such as your account number and balance, payment history, parties to transactions, cost basis information, and other financial information).
Categories of Information the Fund Discloses
. The Fund does not disclose any non-public personal information about their current or former shareholders to unaffiliated third parties, except as required or permitted by law. The Fund is permitted by law to disclose all of the information it collects, as described above, to their service providers (such as the Fund’s custodian, administrator and transfer agent) to process your transactions and otherwise provide services to you.
Confidentiality and Security
. The Fund restricts access to your nonpublic personal information to those persons who require such information to provide products or services to you. The Fund maintains physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Prospectus 24
Financial Highlights
The financial highlights table is intended to help you understand the Fund's financial performance since inception. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate you would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Cohen Fund Audit Services, Ltd., the Fund’s independent registered public accounting firm, whose report, along with the Fund's financial statements, are included in the Fund's annual report, which is available upon request and incorporated by reference in the Statement of Additional Information.
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Financial Highlights
|
|
|
|
|
Selected data for a share outstanding throughout
|
|
6/29/2012*
|
|
|
the period:
|
|
to
|
|
|
|
|
3/31/2013
|
|
|
Net Asset Value -
|
|
|
|
|
Beginning of Period
|
$
|
10.00
|
|
|
Net Investment Income (Loss)
(a)
|
|
0.32
|
|
|
Net Gains or Losses on Securities
|
|
|
|
|
(realized and unrealized)
(b)
|
|
0.42
|
|
|
Total from Investment Operations
|
|
0.74
|
|
|
Distributions (From Net Investment Income)
|
|
(0.16
|
)
|
|
Distributions (From Capital Gains)
|
|
(0.13
|
)
|
|
Total Distributions
|
|
(0.29
|
)
|
|
Net Asset Value -
|
|
|
|
|
End of Period
|
$
|
10.45
|
|
|
Total Return
(c)
|
|
7.44
|
% **
|
|
Ratios/Supplemental Data
|
|
|
|
|
Net Assets - End of Period (Thousands)
|
$
|
49,172
|
|
|
Before Waiver/Reimbursement
|
|
|
|
|
Ratio of Expenses to Average Net Assets
(d)
|
|
1.66
|
% ***
|
|
Ratio of Net Investment Income (Loss) to Average Net Assets
(d)
(e)
|
|
3.89
|
% ***
|
|
After Waiver/Reimbursement
|
|
|
|
|
Ratio of Expenses to Average Net Assets
(d)
|
|
1.45
|
% ***
|
|
Ratio of Net Investment Income (Loss) to Average Net Assets
(d)
(e)
|
|
4.11
|
% ***
|
|
Portfolio Turnover Rate
|
|
364.88
|
% **
|
* The Fund commenced operations on June 29, 2012.
** Not Annualized.
*** Annualized.
(a) Based on Average Shares Outstanding.
(b) Realized and unrealized gains and losses per share in this caption are balancing amounts necessary
to reconcile the change in net asset value for the period, and may not reconcile with the aggregate gains
and losses in the Statement of Operations due to share transactions for the period.
(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.
(d) These ratios exclude the impact of expenses of the underlying security holdings listed in the Schedule
of Investments.
(e) Recognition of net investment income by the Fund is affected by the timing of the declaration of
dividends by the underlying investment companies in which the Fund invests.
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Prospectus 25
Where To Go For Information
For shareholder inquiries, please call toll-free in the U.S. at 1-877-385-2720.
You will also find more information about the Fund on our website at www.neimanfunds.com or in the following documents:
Statement of Additional Information
The Statement of Additional Information contains additional and more detailed information about the Fund, and is considered to be a part of this Prospectus. Additional information about the Fund's investments is available in the Fund's annual and semi-annual reports to shareholders. In the Fund's annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.
There are three ways to get a copy of these documents.
1. Call or write for one, and a copy will be sent without charge.
Neiman Tactical Income Fund
c/o Mutual Shareholder Services
8000 Town Centre Drive, Suite 400
Broadview Heights, Ohio 44147
1-877-385-2720
www.neimanfunds.com
2. Call or write the Public Reference Section of the Securities and Exchange Commission
(“SEC”) and ask them to mail you a copy. The SEC charges a fee for this service. You can
also review and copy information about the Fund in person at the SEC Public Reference
Room in Washington D.C.
Public Reference Section of the SEC
Washington D.C. 20549-0102
1-202-551-8090
Copies of these documents may also be obtained, after paying a duplication fee, by elec-
tronic request at the following e-mail address: publicinfo@sec.gov
3. Go to the SEC's website (www.sec.gov) and download a text-only version.
|
|
Neiman Funds SEC file number 811-21290
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No dealer, salesman, or other person has been authorized to give any information or to make any representations, other than those contained in this Prospectus, and, if given or made, such other information or representations must not be relied upon as having been authorized by the Funds or the Adviser. This Prospectus does not constitute an offering in any state in which such offering may not lawfully be made.
Neiman Funds
6631 Main Street
Williamsville, NY 14221
|
NEIMAN TACTICAL INCOME FUND
Class A Shares (NTAFX)
STATEMENT OF ADDITIONAL INFORMATION
|
This Statement of Additional Information (“SAI”) is not a prospectus. It should be read in conjunction with the Prospectus of the Neiman Tactical Income Fund dated August 1, 2013. The Fund’s Annual Report to Shareholders, as filed with the Securities and Exchange Commission on June 5, 2013, has been incorporated by reference into this SAI. A free copy of the Prospectus or Annual Report can be obtained by writing the Transfer Agent at 8000 Town Centre Drive, Suite 400, Broadview Heights, OH 44147 or by calling 1-877-385-2720.
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TABLE OF CONTENTS
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|
|
DESCRIPTION OF THE TRUST AND THE FUND
|
1
|
|
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
|
1
|
|
INVESTMENT LIMITATIONS
|
6
|
|
THE INVESTMENT ADVISER
|
7
|
|
THE INVESTMENT SUB-ADVISER
|
8
|
|
THE PORTFOLIO MANAGERS
|
8
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|
TRUSTEES AND OFFICERS
|
9
|
|
BOARD INTEREST IN THE FUND
|
12
|
|
COMPENSATION
|
12
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|
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
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13
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|
AUDIT COMMITTEE
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13
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PORTFOLIO TRANSACTIONS AND BROKERAGE
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13
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ADDITIONAL TAX INFORMATION
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14
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PRICING OF FUND SHARES
|
16
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SHARES OF THE FUND
|
17
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|
DISTRIBUTION PLAN
|
19
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PURCHASE AND SALES THROUGH BROKER DEALERS
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22
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ANTI-MONEY LAUNDERING PROGRAM
|
22
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CUSTODIAN
|
22
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FUND SERVICES
|
22
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
23
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|
DISTRIBUTOR
|
23
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|
DISCLOSURE OF PORTFOLIO HOLDINGS
|
23
|
|
FINANCIAL STATEMENTS
|
24
|
|
PROXY VOTING STATEMENT
|
24
|
-i-
DESCRIPTION OF THE TRUST AND THE FUND
The Neiman Tactical Income Fund (the “Fund”) was organized as a non-diversified series of Neiman Funds (the “Trust”) on June 25, 2012 and commenced operations on June 29, 2012. The Trust is an
open-end investment company established under the laws of Ohio by an Agreement and Declaration of Trust dated January 3, 2003 (the “Trust Agreement”) consisting of three series. The Trust Agreement permits the Trustees to issue an
unlimited number of shares of beneficial interest of separate series without par value. The investment adviser to the Fund is Neiman Funds Management LLC (the “Adviser”). The sub-adviser to the Fund is PageOne Funds Management, LLC (the
“Sub-Adviser”).
The Fund does not issue share certificates. All shares are held in non-certificate form registered on the books of the Fund and the Fund's transfer agent for the account of the shareholder. Each share of a series
represents an equal proportionate interest in the assets and liabilities belonging to the applicable class of the series with each other share of that series and is entitled to such dividends and distributions out of income belonging to the
applicable class of the series as are declared by the Trustees. The shares do not have cumulative voting rights or any preemptive or conversion rights, and the Trustees have the authority from time to time to divide or combine the shares of any
series into a greater or lesser number of shares of that series so long as the proportionate beneficial interest in the assets belonging to that series and the rights of shares of any other series are in no way affected. In case of any liquidation
of a series, the holders of shares of the series being liquidated will be entitled to receive as a class a distribution out of the assets, net of the liabilities, belonging to that series. Expenses attributable to any series or class are borne by
that series or class, and thus net asset values per share of the class may differ. Any general expenses of the Trust not readily identifiable as belonging to a particular series are allocated by or under the direction of the Trustees in such manner
as the Trustees determine to be fair and equitable. No shareholder is liable to further calls or to assessment by the Trust without his or her express consent.
For information concerning the purchase and redemption of shares of the Fund, see “How to Buy Shares and Sell Shares” in the Prospectus. For a description of the methods used to determine the share price and
value of the Fund's assets, see “Pricing of Fund Shares” in the Prospectus and “Pricing of Fund Shares” in this Statement of Additional Information.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a discussion of some of the investments the Fund may make and some of the techniques it may use.
A. Investment Company Securities. The Fund invests primarily in the securities of other investment companies to the extent that such an investment would be consistent with the requirements of the Investment Company Act
of 1940, as amended and the Fund's investment objectives. Investments in the securities of other investment companies (also referred to as “funds”) may involve duplication of advisory fees and certain other expenses. By investing in
another fund, the Fund becomes a shareholder of that investment company. As a result, the Fund's shareholders indirectly will bear the Fund's proportionate share of the fees and expenses paid by shareholders of the other investment company, in
addition to the fees and expenses the Fund's shareholders directly bear in connection with the Fund's own operations.
Under Section 12(d)(1) of the Investment Company Act of 1940, as amended, a fund may invest only up to 5% of its total assets in the securities of any one investment company, and may not own more than 3% of the
outstanding voting stock of any one investment company (the “3% Limitation”) or invest more than 10% of its total assets in the securities of other investment companies. However, Section 12(d)(1)(F) of the Investment Company Act of 1940,
as amended, provides that the provisions of paragraph 12(d)(1) shall not apply to securities purchased or otherwise acquired by a fund if (i) immediately after such purchase or acquisition not more than 3% of the total outstanding stock of such
registered investment company is owned by the fund and all affiliated persons of the fund; and (ii) the fund has not offered or sold after January 1, 1971, and is not proposing to offer or sell any security issued by it through a principal
underwriter or otherwise at a public or offering price which includes a sales load of more than ½%. In the alternative, the Fund may rely on Rule 12d1-3, which allows unaffiliated mutual funds to exceed the 5% limitation and the 10%
limitation, provided the aggregate sales loads any investor pays (i.e., the combined distribution expenses of both the acquiring fund and the acquired funds) does not exceed the limits on sales loads established by the FINRA for funds of funds.
1
An investment company that issues shares to a fund pursuant to paragraph 12(d)(1)(F) is not required to redeem its shares in an amount exceeding 1% of such investment company’s total outstanding shares in any
period of less than thirty days. When the Fund exercises voting rights, by proxy or otherwise, with respect to investment companies owned by the Fund, the Fund will either seek instruction from shareholders with regard to the voting of all proxies
and vote in accordance with such instructions, or vote the shares held by the Fund in the same proportion as the vote of all other holders of such security.
The Fund and the other investment companies in which the Fund invests also may invest in the following securities and/or use the following investment techniques.
B. Equity Securities. The Fund may invest in equity securities such as common stock, convertible preferred stock, convertible bonds, rights and warrants. Common stocks, the most familiar type, represent an equity
(ownership) interest in a corporation. Warrants are options to purchase equity securities at a specified price for a specific time period. Rights are similar to warrants, but normally have a short duration and are distributed by the issuer to its
shareholders. Although equity securities have a history of long term growth in value, their prices fluctuate based on changes in a company's financial condition and on overall market and economic conditions.
Equity securities also include SPDRs (S&P Depositary Receipts, known as “Spiders”), DIAMONDS, QQQQs and a number of other exchange traded funds. SPDRs represent ownership in the SPDR Trust, a unit
investment trust that holds a portfolio of common stocks that closely tracks the price performance and dividend yield of the S&P 500 Composite Price Index. SPDRs trade on the American Stock Exchange under the symbol SPY. A MidCap SPDR is similar
to a SPDR except that it tracks the performance of the S&P MidCap 400 Index and trades on the American Stock Exchange under the symbol MDY. DIAMONDS represent ownership in the DIAMONDS Trust, a unit investment trust that serves as an index to
the Dow Jones Industrial Average (the “Dow”) in that its holding consists of the 30 component stocks of the Dow. DIAMONDS trade on the American Stock Exchange under the symbol DIA. QQQQs (PowerShares QQQ) represent ownership in the
NASDAQ-100 Trust, a unit investment trust that attempts to closely track the price and yield performance of the NASDAQ 100 Index by holding shares of all the companies in the Index. QQQQs trade on the American Stock Exchange under the symbol QQQQ.
The Fund may also invest in a variety of other exchange traded funds, including, but not limited to, iShares, HOLDRs, Fidelity Select Portfolios, Select Sector SPDRs, Fortune e-50, Fortune 500 and streetTRACK. To the extent the Fund invests in a
sector product, the Fund is subject to the risks associated with that sector. Additionally, the Fund may invest in new exchange traded shares as they become available.
C. Options Transactions. The Fund may invest in funds and exchange traded funds that engage in option transactions involving individual securities and stock indexes. An option involves either: (a) the right or the
obligation to buy or sell a specific instrument at a specific price until the expiration date of the option; or (b) the right to receive payments or the obligation to make payments representing the difference between the closing price of a stock
index and the exercise price of the option expressed in dollars times a specified multiple until the expiration date of the option. Options are sold (written) on securities and stock indexes. The purchaser of an option on a security pays the seller
(the writer) a premium for the right granted but is not obligated to buy or sell the underlying security. The purchaser of an option on a stock index pays the seller a premium for the right granted, and in return the seller of such an option is
obligated to make the payment. A writer of an option may terminate the obligation prior to expiration of the option by making an offsetting purchase of an identical option. Options are traded on organized exchanges and in the over-the-counter
market. To cover the potential obligations involved in writing options, the Fund will either: (a) own the underlying security, or in the case of an option on a market index, will hold a portfolio of stocks substantially replicating the movement of
the index; or (b) the Fund will segregate with the custodian liquid assets sufficient to purchase the underlying security or equal to the market value of the stock index option, marked to market daily.
The purchase and writing of options requires additional skills and techniques beyond normal portfolio management, and involves certain risks. The purchase of options limits the Fund's potential loss to the amount of the
premium paid and can afford the Fund the opportunity to profit from favorable movements in the price of an underlying security to a greater extent than if transactions were effected in the security directly. However, the purchase of an option could
result in the Fund losing a greater percentage of its investment than if the transaction were effected directly. When the Fund writes a call option, it will receive a premium, but it will give up the opportunity to profit from a price increase in
the underlying security above the exercise price as long as its obligation as a writer continues, and it will retain the risk of loss should the price of the security decline. When the
2
Fund writes a put option, it will assume the risk that the price of the underlying security or instrument will fall below the exercise price, in which case the Fund may be required to purchase the security or instrument at a higher price than the
market price of the security or instrument. In addition, there can be no assurance that the Fund can effect a closing transaction on a particular option it has written. Further, the total premium paid for any option may be lost if the Fund does not
exercise the option or, in the case of over-the-counter options, the writer does not perform its obligations.
D. Foreign Securities. The Fund may invest in funds and exchange traded funds that may invest in foreign equity securities including American Depositary Receipts (“ADRs”). ADRs are certificates evidencing
ownership of shares of a foreign-based issuer held in trust by a bank or similar financial institution. They are alternatives to the direct purchase of the underlying securities in their national markets and currencies. ADRs are subject to risks
similar to those associated with direct investment in foreign securities.
Foreign investments can involve significant risks in addition to the risks inherent in U.S. investments. The value of securities denominated in or indexed to foreign currencies, and of dividends and interest from such
securities, can change significantly when foreign currencies strengthen or weaken relative to the U.S. dollar. Foreign securities markets generally have less trading volume and less liquidity than U.S. markets, and prices on some foreign markets can
be highly volatile. Many foreign countries lack uniform accounting and disclosure standards comparable to those applicable to U.S. companies, and it may be more difficult to obtain reliable information regarding an issuer’s financial condition
and operations. In addition, the costs of foreign investing, including withholding taxes, brokerage commissions, and custodial costs, generally are higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets. Foreign issuers, brokers, and securities markets may be subject to less government supervision. Foreign security trading practices, including
those involving the release of assets in advance of payment, may invoke increased risks in the event of a failed trade or the insolvency of a broker-dealer, and may involve substantial delays. It also may be difficult to enforce legal rights in
foreign countries.
Investing abroad also involves different political and economic risks. Foreign investments may be affected by actions of foreign governments adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation, restrictions on U.S. investment or on the ability to repatriate assets or convert currency into U.S. dollars, or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises. Investments in foreign countries also involve a risk of local political, economic or social instability, military action or unrest, or adverse diplomatic developments. There
is no assurance that an advisor will be able to anticipate or counter these potential events and their impacts on the Fund’s share price.
The considerations noted above generally are intensified for investments in developing countries. Developing countries may have relatively unstable governments, economies based on only a few industries and securities
markets that trade a small number of securities.
E. Short Sales. The Fund may invest in funds and exchange traded funds that may sell a security short in anticipation of a decline in the market value of the security. When the Fund engages in a short sale, it sells a
security which it does not own. To complete the transaction, the Fund must borrow the security in order to deliver it to the buyer. The Fund must replace the borrowed security by purchasing it at the market price at the time of replacement, which
may be more or less than the price at which the Fund sold the security. The Fund will incur a loss as a result of the short sale if the price of the security increases between the date of the short sale and the date on which the Fund replaces the
borrowed security. The Fund will realize a profit if the security declines in price between those dates. Any potential gain is limited to the price at which the Fund sold the security short, and any potential loss is unlimited in size.
In connection with its short sales, the Fund will be required to maintain a segregated account with the Fund's custodian of cash or liquid assets equal to (i) the current market value of the securities sold short, less
(ii) any collateral deposited with its broker (not including the proceeds from the short sales). Depending on arrangements made with the broker or custodian, the Fund may not receive any payments (including interest) on collateral deposited with the
broker or custodian.
3
F. Securities Lending. The Fund may make long and short term loans of its portfolio securities to parties such as broker-dealers, banks, or institutional investors. Securities lending allows the Fund to retain ownership
of the securities loaned and, at the same time, to earn additional income. Since there may be delays in the recovery of loaned securities, or even a loss of rights in collateral supplied, should the borrower fail financially, loans will be made only
to parties whose creditworthiness has been reviewed and deemed satisfactory by the Adviser. Furthermore, they will only be made if, in the judgment of the Adviser, the consideration to be earned from such loans would justify the risk.
The Adviser understands that it is the current view of the staff of the Securities and Exchange Commission (the “SEC”) that a Fund may engage in loan transactions only under the following conditions: (1) the
Fund must receive 100% collateral in the form of cash, cash equivalents (e.g., U.S. Treasury bills or notes) or other high grade liquid debt instruments from the borrower; (2) the borrower must increase the collateral whenever the market value of
the securities loaned (determined on a daily basis) rises above the value of the collateral; (3) after giving notice, the Fund must be able to terminate the loan at any time; (4) the Fund must receive reasonable interest on the loan or a flat fee
from the borrower, as well as amounts equivalent to any dividends, interest, or other distributions on the securities loaned and to any increase in market value; (5) the Fund may pay only reasonable custodian fees in connection with the loan; and
(6) the Board of Trustees must be able to vote proxies on the securities loaned, either by terminating the loan or by entering into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any security in which the Fund is authorized to invest. Investing this cash subjects that investment, as well as the security loaned, to market forces (i.e.,
capital appreciation or depreciation).
G. Restricted and Illiquid Securities. The portfolio of the Fund may contain illiquid securities. Illiquid securities generally include securities which cannot be disposed of promptly and in the ordinary course of
business without taking a reduced price. Securities may be illiquid due to contractual or legal restrictions on resale or lack of a ready market. The following securities are considered to be illiquid: repurchase agreements and reverse repurchase
agreements maturing in more than seven days, nonpublicly offered securities and restricted securities. Restricted securities are securities the resale of which is subject to legal or contractual restrictions. Restricted securities may be sold only
in privately negotiated transactions, in a public offering with respect to which a registration statement is in effect under the Securities Act of 1933 or pursuant to Rule 144 or Rule 144A promulgated under such Act. Where registration is required,
the Fund may be obligated to pay all or part of the registration expense, and a considerable period may elapse between the time of the decision to sell and the time such security may be sold under an effective registration statement. If during such
a period adverse market conditions were to develop, the Fund might obtain a less favorable price than the price it could have obtained when it decided to sell. The Fund will not invest more than 15% of its net assets in illiquid securities.
With respect to Rule 144A securities, these restricted securities are treated as exempt from the 15% limit on illiquid securities, provided that a dealer or institutional trading market in such securities exists. The
Fund will not, however, invest more than 10% of its net assets in Rule 144A securities. Under the supervision of the Board of Trustees, the Adviser determines the liquidity of restricted securities and, through reports from the Adviser, the Board of
Trustees will monitor trading activity in restricted securities. If institutional trading in restricted securities were to decline, the liquidity of the Fund could be adversely affected.
H. U.S. Government Securities. U.S. government securities are high-quality debt securities issued or guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S. government. Not all U.S. government
securities are backed by the full faith and credit of, or guaranteed by, the United States Treasury. For example, securities issued by the Farm Credit Banks or by the Federal National Mortgage Association (“Fannie Mae”) are supported by
the instrumentality's right to borrow money from the U.S. Treasury under certain circumstances. However, on September 7, 2008, the U.S. Treasury Department and the Federal Housing Finance Authority (the “FHFA”) announced that Fannie Mae
and The Federal Home Loan Mortgage Corporation (“Freddie Mac”) had been placed into conservatorship, a statutory process designed to stabilize a troubled institution with the objective of returning the entity to normal business operations.
The U.S. Treasury Department and the FHFA at the same time established a secured lending facility and a Secured Stock Purchase Agreement with both Fannie Mae and Freddie Mac to ensure that each entity had the ability to fulfill its financial
obligations. The FHFA announced that it does not anticipate any disruption in pattern of payments or ongoing business operations of Fannie Mae or Freddie
4
Mac. Securities issued by other agencies or instrumentalities are supported only by the credit of the entity that issued them.
I. Corporate Debt Securities. Corporate debt securities are long and short term debt obligations issued by companies (such as publicly issued and privately placed bonds, notes and commercial paper). The Adviser
considers corporate debt securities to be of investment grade quality if they are rated BBB or higher by S&P or Baa or higher by Moody's, or if unrated, determined by the Adviser to be of comparable quality. Investment grade debt securities
generally have adequate to strong protection of principal and interest payments. In the lower end of this category, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay
principal than in higher rated categories.
J. Fixed Income Securities. The Fund may invest in all types of fixed income securities, including such securities purchased on a when-issued, delayed delivery, or forward commitment basis. Fixed income securities are
subject to credit risk and interest rate risk. Credit risk is the risk that the Fund could lose money if an issuer of a fixed income security cannot meet its financial obligations or goes bankrupt. Interest rate risk is the risk that the Fund's
investments in fixed income securities may fall when interest rates rise.
Investments in high-yield bonds are considered to be more speculative than higher quality fixed income securities. They are more susceptible to credit risk than investment-grade securities, especially during periods of
economic uncertainty or economic downturns. The value of lower quality securities are subject to greater volatility and are generally more dependent on the ability of the issuer to meet interest and principal payments than higher quality securities.
Issuers of high-yield securities may not be as strong financially as those issuing bonds with higher credit ratings.
K. Financial Services Industry Obligations. The Fund may invest in each of the following obligations of the financial services industry:
(1) Certificates of Deposit. Certificates of deposit are negotiable certificates evidencing the indebtedness of a commercial bank or a savings and loan association to repay funds deposited with it for a definite period
of time (usually from fourteen days to one year) at a stated or variable interest rate.
(2) Time Deposits. Time deposits are non-negotiable deposits maintained in a banking institution or a savings and loan association for a specified period of time at a stated interest rate.
(3) Bankers' Acceptances. Bankers' acceptances are credit instruments evidencing the obligation of a bank to pay a draft which has been drawn on it by a customer, which instruments reflect the obligation both of the
bank and of the drawer to pay the face amount of the instrument upon maturity.
L. Repurchase Agreements. The Fund may invest in repurchase agreements fully collateralized by obligations issued by the U.S. government or agencies of the U.S. government (“U.S. Government Obligations”). A
repurchase agreement is a short term investment in which the purchaser (i.e., the Fund) acquires ownership of a U.S. Government Obligation (which may be of any maturity) and the seller agrees to repurchase the obligation at a future time at a set
price, thereby determining the yield during the purchaser's holding period (usually not more than 7 days from the date of purchase). Any repurchase transaction in which the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy or other default of the seller, the Fund could experience both delays in liquidating the underlying security and losses in value. However, the Fund intends to enter
into repurchase agreements only with the custodian, other banks with assets of $1 billion or more and registered securities dealers determined by the Adviser to be creditworthy. The Adviser monitors the creditworthiness of the banks and
securities dealers with which the Fund engages in repurchase transactions.
M. Borrowing. The Fund is permitted to borrow money up to one-third of the value of its total assets. Borrowing is a speculative technique that increases both investment opportunity and the Fund's ability to achieve
greater diversification. However, it also increases investment risk. Because the Fund's investments will fluctuate in value, whereas the interest obligations on borrowed funds may be fixed, during times of borrowing, the Fund's net asset value may
tend to increase more when its investments increase in value, and decrease more when its investments decrease in value. In addition, interest costs on borrowings may fluctuate with changing market interest
5
rates and may partially offset or exceed the return earned on the borrowed funds. Also, during times of borrowing under adverse market conditions, the Fund might have to sell portfolio securities to meet interest or principal payments at a time when
fundamental investment considerations would not favor such sales.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been adopted by the Trust with respect to the Fund and are fundamental (“Fundamental”), i.e, they may not be changed without the affirmative vote of
a majority of the outstanding shares of the Fund. As used in the Prospectus and the Statement of Additional Information, the term “majority” of the outstanding shares of the Fund means the lesser of: (1) 67% or more of the outstanding
shares of the Fund present at a meeting, if the holders of more than 50% of the outstanding shares of the Fund are present or represented at such meeting; or (2) more than 50% of the outstanding shares of the Fund. Other investment practices which
may be changed by the Board of Trustees without the approval of shareholders to the extent permitted by applicable law, regulation or regulatory policy are considered non-fundamental (“Non-Fundamental”).
1. Borrowing Money. The Fund will not borrow money, except: (a) from a bank, provided that immediately after such borrowing there is an asset coverage of 300% for all borrowings of the Fund; or (b) from a bank or other
persons for temporary purposes only, provided that such temporary borrowings are in an amount not exceeding 5% of the Fund's total assets at the time when the borrowing is made. This limitation does not preclude the Fund from entering into reverse
repurchase transactions, provided that the Fund has an asset coverage of 300% for all borrowings and repurchase commitments of the Fund pursuant to reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This limitation is not applicable to activities that may be deemed to involve the issuance or sale of a senior security by the Fund, provided that the
Fund's engagement in such activities is consistent with or permitted by the Investment Company Act of 1940, as amended (the “1940 Act”), the rules and regulations promulgated thereunder or interpretations of the SEC or its staff.
3. Underwriting. The Fund will not act as underwriter of securities issued by other persons. This limitation is not applicable to the extent that, in connection with the disposition of portfolio securities (including
restricted securities), the Fund may be deemed an underwriter under certain federal securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This limitation is not applicable to investments in marketable securities which are secured by or represent interests in real estate. This limitation does
not preclude the Fund from investing in mortgage-related securities or investing in companies engaged in the real estate business or that have a significant portion of their assets in real estate (including real estate investment trusts).
5. Commodities. The Fund will not purchase or sell commodities unless acquired as a result of ownership of securities or other investments. This limitation does not preclude the Fund from purchasing or selling options
or futures contracts, from investing in securities or other instruments backed by commodities or from investing in companies which are engaged in a commodities business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except: (a) by loaning portfolio securities; (b) by engaging in repurchase agreements; or (c) by purchasing non-publicly offered debt securities. For purposes of
this limitation, the term “loans” shall not include the purchase of a portion of an issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total assets in a particular industry. This limitation is not applicable to investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum limitations on its investment policies and limitations, an excess above the fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or the action taken. This paragraph does not apply to the borrowing policy set forth in paragraph 1 above.
6
Notwithstanding any of the foregoing limitations, any investment company, whether organized as a trust, association or corporation, or a personal holding company, may be merged or consolidated with or acquired by the Trust, provided that if such merger, consolidation or acquisition results in an investment in the securities of any issuer prohibited by said paragraphs, the Trust shall, within ninety days after the consummation of such merger, consolidation or acquisition, dispose of all of the securities of such issuer so acquired or such portion thereof as shall bring the total investment therein within the limitations imposed by said paragraphs above as of the date of consummation.
Non-Fundamental. The following limitations have been adopted by the Trust with respect to the Fund and are Non-Fundamental (see “Investment Limitations - Fundamental” above).
1. Pledging. The Fund will not mortgage, pledge, hypothecate or in any manner transfer, as security for indebtedness, any assets of the Fund except as may be necessary in connection with borrowings described in limitation (1) above. Margin deposits, security interests, liens and collateral arrangements with respect to transactions involving options, futures contracts, short sales and other permitted investments and techniques are not deemed to be a mortgage, pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. The Fund will not purchase any security while borrowings (including reverse repurchase agreements) representing more than one third of its total assets are outstanding.
3. Margin Purchases. The Fund will not purchase securities or evidences of interest thereon on “margin.” This limitation is not applicable to short term credit obtained by a Fund for the clearance of purchases and sales or redemption of securities, or to arrangements with respect to transactions involving options, futures contracts, short sales and other permitted investments and techniques.
4. Illiquid Investments. The Fund will not invest more than 15% of its net assets in securities for which there are legal or contractual restrictions on resale and other illiquid securities.
THE INVESTMENT ADVISER
The Adviser is Neiman Funds Management LLC located at 6631 Main Street, Williamsville, New York 14221. As shareholders of the Adviser, Harvey Neiman, Daniel Neiman, Michael Lomas and Glenn Wiggle are regarded to control the Adviser for purposes of the 1940 Act.
Under the terms of the Management Agreement, the Adviser manages the investment portfolio of the Fund, subject to policies adopted by the Trust’s Board of Trustees. Under the Management Agreement, the Adviser, at its own expense and without reimbursement from the Trust, furnishes office space and all necessary office facilities, equipment and executive personnel necessary for managing the assets of the Fund. The Adviser also pays the salaries and fees of all of its officers and employees that serve as officers and trustees of the Trust. The Fund is responsible for the compensation and expenses of any trustees and officers who are not officers or employees of the Adviser. The Adviser receives an annual investment management fee from the Fund of 1.00% of the average daily net assets of the Fund. The Adviser has agreed to waive management fees and reimburse expenses to the extent necessary to maintain total annual operating expenses of the Fund (excluding brokerage fees and commissions, interest and other borrowing expenses, taxes, extraordinary expenses and the indirect costs of investing in Acquired Funds) at 1.45% of its average daily net assets for Class A Shares through July 31, 2014. For the fiscal period ended March 31, 2013, the Adviser earned management fees totaling $278,341 and waived fees and/or reimbursed expenses totaling $59,528.
The Adviser retains the right to use the name “Neiman Tactical Income Fund” or any derivative thereof in connection with another investment company or business enterprise with which the Adviser is or may become associated. The Trust's right to use the name “Neiman Tactical Income Fund” or any derivative thereof automatically ceases ninety days after termination of the Agreement and may be withdrawn by the Adviser on ninety days written notice.
The Adviser may make payments to banks or other financial institutions that provide shareholder services and administer shareholder accounts. If a bank or other financial institution were prohibited from continuing to perform all or a part of such services, management of the Fund believes that there would be no
7
material impact on the Fund or their shareholders. Financial institutions may charge their customers fees for offering these services to the extent permitted by applicable regulatory authorities, and the overall return to those shareholders availing themselves of the financial institution’s services will be lower than to those shareholders who do not. The Fund may from time to time purchase securities issued by financial institutions that provide such services; however, in selecting investments for the Fund, no preference will be shown for such securities.
THE INVESTMENT SUB-ADVISER
PageOne Funds Management, LLC (the “Sub-Adviser”) serves as the sub-adviser of the Fund. The Sub-Adviser makes the day-to-day investment decisions and continuously reviews, supervises and administers the Fund's investment program. The Sub-Adviser was organized in 2012 and its address is 2537 Rt. 9, Suite 205, Malta, NY 12020. The Fund's investment portfolio is managed on a day-to-day basis by Edgar R. Page, Joseph Arena, and Kyle Webber. As full compensation for all services rendered, Neiman Funds Management LLC pays the Sub-Adviser compensation at a rate equal to 0.00% of the Fund’s average daily net assets during months when the Fund’s average daily net assets are between $0 to $25 million. During months when the Fund’s average daily net assets are between $25 to $50 million, the sub-advisory fee will be equal to an annual rate of 0.20% of all Fund assets. During months when the Fund’s average daily net assets are between $50 to $100 million, the sub-advisory fee will be equal to an annual rate of 0.30% of all Fund assets. During months when the Fund’s average daily net assets are above $100 million, the sub-advisory fee will be equal to an annual rate of 0.25% of all Fund assets. Edgar R. Page is lead portfolio manager of the Fund. He is also founder and principal of the Sub-Adviser and chairman and chief executive officer of PageOne Financial, Inc.
THE PORTFOLIO MANAGERS
Edgar R. Page, Joseph Arena and Kyle Webber (the “Portfolio Managers”) are the portfolio managers responsible for the day-to-day management of the Fund. The Portfolio Managers also manage separate accounts for individuals, trusts, corporations, partnerships and retirement plans. The following provides information regarding other accounts managed by the Portfolio Managers as of May 31, 2013:
Edgar R. Page
|
|
|
|
|
|
|
Total Assets By
|
|
|
|
|
|
Number of Accounts
|
|
Account Type
|
|
|
Number of Accounts
|
|
Total Assets By
|
by Type Subject to a
|
|
Subject to a
|
|
Account Type
|
by Account Type
|
|
Account Type
|
Performance Fee
|
|
Performance Fee
|
|
Registered
|
0
|
|
$0
|
0
|
|
$0
|
|
Investment
|
|
|
|
|
|
|
|
Companies
|
|
|
|
|
|
|
|
Other Pooled
|
0
|
|
$0
|
0
|
|
$0
|
|
Investment Vehicles
|
|
|
|
|
|
|
|
Other Accounts
|
2,511
|
|
$215,788,703
|
0
|
|
$0
|
Joseph Arena
|
|
|
|
|
|
|
Total Assets By
|
|
|
|
|
|
Number of Accounts
|
|
Account Type
|
|
|
Number of Accounts
|
|
Total Assets By
|
by Type Subject to a
|
|
Subject to a
|
|
Account Type
|
by Account Type
|
|
Account Type
|
Performance Fee
|
|
Performance Fee
|
|
Registered
|
0
|
|
$0
|
0
|
|
$0
|
|
Investment
|
|
|
|
|
|
|
|
Companies
|
|
|
|
|
|
|
|
Other Pooled
|
0
|
|
$0
|
0
|
|
$0
|
|
Investment Vehicles
|
|
|
|
|
|
|
|
Other Accounts
|
2,511
|
|
$215,788,703
|
0
|
|
$0
|
8
Kyle Webber
|
|
|
|
|
|
|
Total Assets By
|
|
|
|
|
|
Number of Accounts
|
|
Account Type
|
|
|
Number of Accounts
|
|
Total Assets By
|
by Type Subject to a
|
|
Subject to a
|
|
Account Type
|
by Account Type
|
|
Account Type
|
Performance Fee
|
|
Performance Fee
|
|
Registered
|
0
|
|
$0
|
0
|
|
$0
|
|
Investment
|
|
|
|
|
|
|
|
Companies
|
|
|
|
|
|
|
|
Other Pooled
|
0
|
|
$0
|
0
|
|
$0
|
|
Investment Vehicles
|
|
|
|
|
|
|
|
Other Accounts
|
2,511
|
|
$215,788,703
|
0
|
|
$0
|
Mr. Page, Mr. Arena and Mr. Webber manage separate accounts that may be similar to that to the Fund through an affiliated adviser, PageOne Financial, Inc. Actual or apparent conflicts of interest may arise in connection with the day-to-day management of the Fund and other accounts. The management of the Fund and other accounts may result in unequal time and attention being devoted to the Fund and other accounts. Another potential conflict of interest may arise where another account has the same investment objective as the Fund, whereby the portfolio manager could favor one account over another. Further, a potential conflict could include a portfolio manager’s knowledge about the size, timing and possible market impact of Fund trades, whereby the portfolio manager could use this information to the advantage of other accounts and to the disadvantage of the Fund. These potential conflicts of interest could create the appearance that the portfolio manager is favoring one investment vehicle over another.
Mr. Page, Mr. Arena and Mr. Webber compensation is largely based on the profits realized by Adviser for managing the Fund (none of the Portfolio Managers are paid a base salary). Mr. Page owns all the outstanding shares of the Adviser. He participates directly in the profits and losses of the Adviser, including the advisory fees paid by the Fund. Mr. Arena and Mr. Webber are paid from the Adviser based on its profits. There are no bonuses, deferred compensation or retirement plans associated with the Portfolio Managers’ service to the Fund.
The following table shows the dollar range of equity securities beneficially owned by the Portfolio Managers in the Fund as of March 31, 2013.
|
Name of Portfolio Manager
|
Dollar Range of Equity Securities in
|
|
|
the Fund
|
|
Edgar R. Page
|
none
|
|
Joseph Arena
|
none
|
|
Kyle Webber
|
none
|
TRUSTEES AND OFFICERS
The Board of Trustees supervises the business activities of the Trust. Each Trustee serves as a trustee until the termination of the Trust, unless the Trustee dies, resigns, retires or is removed. The Board has engaged the Adviser to manage and/or administer the Trust and is responsible for overseeing the Adviser and other service providers to the Trust and the Fund. The Board is currently composed of five Trustees, including three Trustees who are not “interested persons” of the Fund, as that term is defined in the 1940 Act (each an “Independent Trustee”). In addition to four regularly scheduled meetings per year, the Board holds special meetings or informal conference calls to discuss specific matters that may require action prior to the next regular meeting. The Board of Trustees has established an Audit Committee comprised entirely of Trustees who are Independent Trustees. The Audit Committee is generally responsible for (i) overseeing and monitoring the Trust's internal accounting and control structure, its auditing function and its financial reporting process, (ii) selecting and recommending to the full Board of Trustees the appointment of auditors for the Trust, (iii) reviewing audit plans, fees, and other material arrangements with respect to the engagement of auditors, including permissible non-audit services performed; (iv) reviewing the qualifications of the auditor's key personnel involved in the foregoing activities and (v) monitoring the auditor's independence.
9
The Chairman of the Board of Trustees is Mr. Harvey Neiman, who is an “interested person” of the Trust, within the meaning of the 1940 Act, on the basis of his affiliation with the Fund and the Adviser. The
Trust does not have a “lead” independent trustee. The use of an interested Chairman balanced by an independent Audit Committee allows the Board to access the expertise necessary of oversee the Trust, identify risks, recognize shareholder
concerns and needs and highlight opportunities. The Audit Committee is able to focus Board time and attention to matters of interest to shareholders and, through its private sessions with the Trust’s auditor, Chief Compliance Officer and legal
counsel, stay fully informed regarding management decisions. Considering the size of the Trust and its shareholder base, the Trustees have determined that an interested Chairman balanced by an independent Audit Committee Lead Independent Trustee is
the appropriate leadership structure for the Board of Trustees
Mutual funds face a number of risks, including investment risk, compliance risk and valuation risk. The Board oversees management of the Fund’s risks directly and through its officers. While day-to-day risk
management responsibilities rest with the Fund’s Chief Compliance Officer, investment adviser and other service providers, the Board monitors and tracks risk by: (1) receiving and reviewing quarterly reports related to the performance and
operations of the Funds; (2) reviewing and approving, as applicable, the compliance policies and procedures of the Trust, including the Trust’s valuation policies and transaction procedures; (3) periodically meeting with the portfolio
management team to review investment strategies, techniques and related risks; (4) meeting with representatives of key service providers, including the Fund’s investment adviser, administrator, transfer agent, the custodian and the independent
registered public accounting firm, to discuss the activities of the Fund; (5) engaging the services of the Chief Compliance Officer of the Fund to test the compliance procedures of the Trust and its service providers; (6) receiving and reviewing
reports from the Trust’s independent registered public accounting firm regarding the Funds’ financial condition and the Trust’s internal controls; and (7) receiving and reviewing an annual written report prepared by the Chief
Compliance Officer reviewing the adequacy of the Trust’s compliance policies and procedures and the effectiveness of their implementation. The Board has concluded that its general oversight of the investment adviser and other service providers
as implemented through the reporting and monitoring process outlined above allows the Board to effectively administer its risk oversight function.
Each Trustee was nominated to serve on the Board of Trustees based on their particular experiences, qualifications, attributes and skills. The characteristics that have led the Board to conclude that each of the Trustees should continue to serve as
a Trustee of the Trust are discussed below.
Harvey Neiman
. Mr. Neiman has served as a Chairman of the Board of Trustees since the Trust’s inception in 2003. Mr. Neiman is President of Neiman Funds Management LLC, the Fund’s investment adviser, and has worked in the
investment management industry since 1993. Mr. Neiman brings operational, investment management and marketing knowledge to the Board of Trustees.
Michael Lomas.
Mr. Lomas has worked in the investment management industry since 1997 as, among other things, the founder and president of an investment advisory firm and the registered representative of a broker-dealer. Like Mr.
Neiman, Mr. Lomas brings operational and investment management knowledge to the Board of Trustees, as well as marketing, strategic planning and budgeting skills.
Darla Clark
. Ms. Clark has served as a Trustee since the Trust’s inception in 2003. Ms. Clark’s business and banking background provides the Audit Committee with the skills to analyze financial reports and the Board with the
knowledge and expertise to determine the strategic direction of the Fund.
Suzanne Cowan Dimeff.
Ms. Dimeff has served as a Trustee since the Trust’s inception in 2003. Ms. Dimeff is an attorney with a litigation practice. Her strategic planning, organizational and leadership skills help the Board and
Audit Committee set long-term goals for the Fund and establish processes for overseeing Trust policies and procedures.
Luke Fairfield.
Mr. Fairfield has served as a Trustee since the Trust’s inception in 2003. As a Chief Financial Officer and Certified Public Accountant, Mr. Fairfield brings budgeting and financial reporting skills to the Board of
Trustees and the Audit Committee. Mr. Fairfield serves as Chairman of the Trust’s Audit Committee.
10
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.
Interested Trustees and Officers
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
Directorships
|
|
Name,
|
Position
|
Term of Office
|
|
Principal Occupation(s)
|
Number of
|
Held By
|
|
Address
(1)
,
|
with
|
and
|
|
During Past
|
Portfolios
|
Trustee During
|
|
and Age
|
the Trust
|
Length of
|
|
5 Years
|
Overseen
|
Past
|
|
|
|
Time Served
|
|
|
By Trustee
|
5 Years
|
|
|
|
Harvey
|
President
|
Indefinite Term
|
|
Neiman Capital Management LLC,
|
3
|
None
|
|
Neiman
(2)
,
|
and Trustee
|
Since 2003
|
|
Portfolio Manager (1999 – 2009).
|
|
|
|
Year of
|
|
|
|
Neiman Funds Management LLC,
|
|
|
|
birth: 1943
|
|
|
|
Portfolio Manager (2009-Present).
|
|
|
|
|
|
|
|
Independent Solutions Wealth
|
|
|
|
|
|
|
|
Management, LLC, Chief
|
|
|
|
|
|
|
|
Investment Officer (2012-Present).
|
|
|
|
|
|
Michael
|
Trustee
|
Indefinite Term
|
|
NEXT Financial Group, Division
|
3
|
None
|
|
Lomas
(2)
|
|
Since 2009
|
|
Manager and Registered
|
|
|
|
Year of
|
|
|
|
Representative (2000-Present);
|
|
|
|
Birth: 1974
|
|
|
|
Financials Guys LLC, Co-
|
|
|
|
|
|
|
|
owner/Co-founder (2000-Present);
|
|
|
|
|
|
|
|
Independent Solutions Wealth
|
|
|
|
|
|
|
|
Management, LLC, President
|
|
|
|
|
|
|
|
(2007-Present). Neiman Funds
|
|
|
|
|
|
|
|
Management LLC, Business
|
|
|
|
|
|
|
|
Development (2009-Present).
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
|
Treasurer,
|
Indefinite Term
|
|
Neiman Capital Management LLC,
|
NA
|
NA
|
|
Neiman
(2)
,
|
Secretary,
|
Since 2003
|
|
Portfolio Manager (1999 – 2009).
|
|
|
|
Year of
|
and Chief
|
(Chief
|
|
Neiman Funds Management LLC,
|
|
|
|
birth: 1977
|
Compliance
|
Compliance
|
|
Portfolio Manager (2009-Present).
|
|
|
|
|
Officer
|
Officer Since
|
|
Independent Solutions Wealth
|
|
|
|
|
|
2004)
|
|
Management, LLC, Chief
|
|
|
|
|
|
|
|
Financial Officer and Portfolio
|
|
|
|
|
|
|
|
Manger (2012-Present).
|
|
|
(1)
The address of each trustees and officer is c/o Neiman Funds, 6631 Main Street, Williamsville, NY 14221.
(2)
Harvey Neiman, Michael Lomas, and Daniel Neiman are considered to be “interested persons” as defined in
Section 2(a)(19) of the Investment Company Act of 1940 by virtue of their affiliation with the Adviser. Harvey
Neiman is Daniel Neiman’s father.
|
11
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.
Independent Trustees
|
Name,
|
Position
|
Term of Office
|
Principal Occupation(s)
|
Number of
|
Other
|
|
Address
(3)
,
|
with
|
and
|
During Past
|
Portfolios
|
Directorships
|
|
and Age
|
the Trust
|
Length of
|
5 Years
|
Overseen
|
Held By
|
|
|
|
Time Served
|
|
By Trustee
|
Trustee During
|
|
|
|
|
|
|
Past 5 Years
|
|
|
|
Darla
|
Independent
|
Indefinite Term
|
Bank Officer, Senior Vice
|
3
|
None
|
|
Clark, Year
|
Trustee
|
Since 2003
|
President of Regents Bank (2001-
|
|
|
|
of Birth:
|
|
|
Present).
|
|
|
|
1950
|
|
|
|
|
|
|
|
|
Suzanne
|
Independent
|
Indefinite Term
|
Attorney at Dimeff Law Offices,
|
3
|
None
|
|
Cowan
|
Trustee
|
Since 2003
|
Tax & Estate Planning Attorney
|
|
|
|
Dimeff,
|
|
|
(2000-Present).
|
|
|
|
Year of
|
|
|
|
|
|
|
Birth: 1953
|
|
|
|
|
|
|
|
|
Luke
|
Independent
|
Indefinite Term
|
Partner / FPS, CPAs, Certified
|
3
|
None
|
|
Fairfield,
|
Trustee
|
Since 2003
|
Public Accountant (2007-Present).
|
|
|
|
Year of
|
|
|
Chief Financial Officer/ Controller
|
|
|
|
Birth: 1976
|
|
|
at Southwest Greens, a
|
|
|
|
|
|
|
Construction Co. (2002-2010).
|
|
|
(3)
The address of each trustee is c/o Neiman Funds, 6631 Main Street, Williamsville, NY 14221.
BOARD INTEREST IN THE FUND
As of December 31, 2012, the Trustees owned the following amounts in the Fund:
|
|
|
|
|
Aggregate Dollar Range of Equity
|
|
Name of Trustee or Officer
|
|
Dollar Range of Securities In The
|
|
Securities In All Registered Investment
|
|
|
|
Neiman Tactical Income Fund
|
|
Companies Overseen By Trustee In
|
|
|
|
|
|
Family of Investment Companies
(1)
|
|
Harvey Neiman
|
|
$10,001-$50,000
|
|
$50,001-$100,000
|
|
Michael Lomas
|
|
$10,001-$50,000
|
|
over $100,000
|
|
Daniel Neiman
|
|
$1-$10,000
|
|
$10,001-$50,000
|
|
Darla Clark
|
|
0
|
|
0
|
|
Suzanne Cowan Dimeff
|
|
0
|
|
0
|
|
Luke Fairfield
|
|
0
|
|
0
|
(1)
The “Family of Investment Companies” and “Fund Complex” includes the Neiman Large Cap Value Fund,
Neiman Balanced Allocation Fund and the Neiman Tactical Income Fund.
|
COMPENSATION
Trustee fees are Trust expenses and each series of the Trust pays a portion of the Trustee fees. Officers and Trustees of the Fund who are deemed “interested persons” of the Trust receive no compensation from the Fund. The following table provides information regarding Trustee compensation for the fiscal year ended March 31, 2013.
12
|
Name
|
|
Aggregate Compensation from the
|
|
Total Compensation from the
|
|
|
|
Neiman Tactical Income Fund
|
|
Fund Complex
(1)
|
|
Harvey Neiman
|
|
$0
|
|
$0
|
|
Michael Lomas
|
|
$0
|
|
$0
|
|
Darla Clark
|
|
$750
|
|
$2,750
|
|
Suzanne Cowan Dimeff
|
|
$750
|
|
$2,750
|
|
Luke Fairfield
|
|
$750
|
|
$2,750
|
(1)
The “Family of Investment Companies” and “Fund Complex” includes the Neiman Large Cap Value Fund,
Neiman Balanced Allocation Fund and the Neiman Tactical Income Fund.
|
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
A principal shareholder is any person who owns (either of record or beneficially) 5% or more of the outstanding shares of the Fund. A control person is one who owns, either directly or indirectly, more than 25% of the voting securities of a company or acknowledges the existence of such control. A controlling shareholder could control the outcome of any proposal submitted to the shareholders for approval, including changes to the Fund’s fundamental policies or the terms of the management agreement with the Adviser. As of July 15, 2013, each of the following shareholders was considered to be either a control person or principal shareholder of the Neiman Tactical Income Fund:
|
Name and Address
|
Shares
|
Percent Ownership
|
|
Type of Ownership
|
|
National Financial Services
|
1,415,490.11
|
62.17%
|
|
Record
|
|
For Benefit of Customers
|
|
|
|
|
|
One World Financial Center
|
|
|
|
|
|
200 Liberty Street, 5
th
Floor
|
|
|
|
|
|
New York, NY 10281-1003
|
|
|
|
|
|
Pershing LLC
|
509,876.91
|
22.39%
|
|
Record
|
|
One Pershing Plaza
|
|
|
|
|
|
Jersey City, NJ 07399
|
|
|
|
|
|
Mid Atlantic Capital Corporation
|
135,697.12
|
5.96%
|
|
Record
|
|
1251 Waterfront Place, Suite 510
|
|
|
|
|
|
Pittsburg, PA 15222
|
|
|
|
|
As of July 15, 2013, the trustees and officers as a group owned less than 1.00% of the outstanding shares of the Fund.
AUDIT COMMITTEE
The Board of Trustees has an Audit Committee, which is comprised of the independent members of the Board of Trustees, Darla Clark, Suzanne Cowan Dimeff and Luke Fairfield. The Audit Committee oversees and monitors the Trust’s internal accounting and control structure, its auditing function and financial reporting process. The Audit Committee selects and recommends to the full Board of Trustees the appointment of auditors for the Trust. The Audit Committee also reviews audit plans, fees, and other material arrangements with respect to the engagement of auditors, including permissible non-audit services performed. It reviews the qualifications of the auditor’s key personnel involved in the foregoing activities and monitors the auditor’s independence. During the fiscal year ended March 31, 2013, the Audit Committee met three times.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees, the Adviser is responsible for the Fund's portfolio decisions and the placing of the Fund's portfolio transactions. In placing portfolio transactions, the Adviser seeks the best qualitative execution for the Fund, taking into account such factors as price (including the applicable brokerage commission or dealer spread), the execution capability, financial responsibility and responsiveness of the
13
broker or dealer and the brokerage and research services provided by the broker or dealer. The Adviser generally seeks favorable prices and commission rates that are reasonable in relation to the benefits received. The Adviser may not give consideration to sales of shares of the Trust as a factor in the selection of brokers and dealers to execute portfolio transactions. However, the Adviser may place portfolio transactions with brokers or dealers that promote or sell the Fund’s shares so long as such placements are made pursuant to policies approved by the Fund’s Board of Trustees that are designed to ensure that the selection is based on the quality of the broker’s execution and not on its sales efforts. For the fiscal period ended March 31, 2013, the Fund paid brokerage commissions of $6,097.
The Adviser is specifically authorized to select brokers or dealers who also provide brokerage and research services to the Fund and/or the other accounts over which the Adviser exercises investment discretion and to pay such brokers or dealers a commission in excess of the commission another broker or dealer would charge if the Adviser determines in good faith that the commission is reasonable in relation to the value of the brokerage and research services provided. The determination may be viewed in terms of a particular transaction or the Adviser's overall responsibilities with respect to the Trust and to other accounts over which it exercises investment discretion.
Research services include supplemental research, securities and economic analyses, statistical services and information with respect to the availability of securities or purchasers or sellers of securities and analyses of reports concerning performance of accounts. The research services and other information furnished by brokers through whom the Fund effect securities transactions may also be used by the Adviser in servicing all of its accounts. Similarly, research and information provided by brokers or dealers serving other clients may be useful to the Adviser in connection with its services to the Fund. Although research services and other information are useful to the Fund and the Adviser, it is not possible to place a dollar value on the research and other information received. It is the opinion of the Board of Trustees and the Adviser that the review and study of the research and other information will not reduce the overall cost to the Adviser of performing its duties to the Fund under the Agreement. Due to research services provided by brokers, the Fund may direct trades to certain brokers.
Over-the-counter transactions will be placed either directly with principal market makers or with broker-dealers, if the same or a better price, including commissions and executions, is available. Fixed income securities are normally purchased directly from the issuer, an underwriter or a market maker. Purchases include a concession paid by the issuer to the underwriter and the purchase price paid to a market maker may include the spread between the bid and asked prices.
When the Fund and another of the Adviser's clients seek to purchase or sell the same security at or about the same time, the Adviser may execute the transaction on a combined (“blocked”) basis. Blocked transactions can produce better execution for the Fund because of the increased volume of the transaction. If the entire blocked order is not filled, the Fund may not be able to acquire as large a position in such security as it desires or it may have to pay a higher price for the security. Similarly, the Fund may not be able to obtain as large an execution of an order to sell or as high a price for any particular portfolio security if the other client desires to sell the same portfolio security at the same time. In the event that the entire blocked order is not filled, the purchase or sale will normally be allocated on a pro rata basis. The allocation may be adjusted by the Adviser, taking into account such factors as the size of the individual orders and transaction costs, when the Adviser believes an adjustment is reasonable.
The Trust and the Adviser have each adopted a Code of Ethics (the “Code”) under Rule 17j-1 of the Investment Company Act of 1940. The personnel subject to the Code are permitted to invest in securities, including securities that may be purchased or held by the Fund. You may obtain a copy of the Code from the SEC.
ADDITIONAL TAX INFORMATION
The following discussion of certain U.S. federal income tax consequences is general in nature and should not be regarded as an exhaustive presentation of all possible tax ramifications. Each shareholder should consult a qualified tax advisor regarding the tax consequences of an investment in the Fund. The tax considerations relevant to a specific shareholder depend upon the shareholder’s specific circumstances, and the following general summary does not attempt to discuss all potential tax considerations that could be relevant to a prospective shareholder with respect to the Fund or its investments. This general summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), the U.S. federal income tax regulations promulgated thereunder, and administrative and
14
judicial interpretations thereof as of the date hereof, all of which are subject to change (potentially on a retroactive basis).
The Fund intends to qualify each year as a regulated investment company under Subchapter M of the Code, which requires compliance with certain requirements concerning the sources of its income, diversification of its assets, and the amount and timing of its distributions to shareholders. Such qualification does not involve supervision of management or investment practices or policies by any government agency or bureau. By so qualifying, the Fund should not be subject to federal income or excise tax on its net investment income or net realized capital gain, which are distributed to shareholders in accordance with the applicable timing requirements.
The Fund intends to distribute substantially all of its net investment income (including any excess of net short-term capital gains over net long-term capital losses) and net realized capital gain (that is, any excess of net long-term capital gains over net short-term capital losses) in accordance with the timing requirements imposed by the Code and therefore should not be required to pay any federal income or excise taxes. Net realized capital gain for a fiscal year is computed by taking into account any capital loss carryforward of the Fund.
To be treated as a regulated investment company under Subchapter M of the Code, the Fund must also (a) derive at least 90% of its gross income from dividends, interest, payments with respect to securities loans, net income from certain publicly traded partnerships and gains from the sale or other disposition of securities or foreign currencies, or other income (including, but not limited to, gains from options, futures or forward contracts) derived with respect to the business of investing in such securities or currencies, and (b) diversify its holding so that, at the end of each fiscal quarter, (i) at least 50% of the market value of the Fund’s assets is represented by cash, U.S. government securities and securities of other regulated investment companies, and other securities (for purposes of this calculation, generally limited in respect of any one issuer, to an amount not greater than 5% of the market value of the Fund’s assets and 10% of the outstanding voting securities of such issuer) and (ii) not more than 25% of the value of its assets is invested in the securities (other than U.S. government securities or the securities of other regulated investment companies) of any one issuer, two or more issuers which the Fund controls and which are determined to be engaged in the same or similar trades or businesses, or the securities of certain publicly traded partnerships.
If the Fund fails to qualify as a regulated investment company under Subchapter M in any fiscal year, it may be treated as a corporation for federal income tax purposes. As such, the Fund would be required to pay income taxes on its net investment income and net realized capital gains, if any, at the rates generally applicable to corporations. Shareholders of the Fund generally would not be liable for income tax on the Fund’s net investment income or net realized capital gains in their individual capacities. However, distributions to shareholders, whether from the Fund’s net investment income or net realized capital gains, would be treated as taxable dividends to the extent of current or accumulated earnings and profits of the Fund.
As a regulated investment company, the Fund is subject to a 4% nondeductible excise tax on certain undistributed amounts of ordinary income and net realized capital gain under a prescribed formula contained in Section 4982 of the Code. The formula requires payment to shareholders during a calendar year of distributions representing at least 98% of the Fund’s ordinary income for the calendar year and at least 98.2% of its net realized capital gain (i.e., the excess of its capital gains over capital losses) realized during the one-year period ending October 31 during such year plus 100% of any income that was neither distributed nor taxed to the Fund during the preceding calendar year. Under ordinary circumstances, the Fund expects to time its distributions so as to avoid liability for this tax.
The following discussion of U.S. federal income tax consequences is for the general information of shareholders that are subject to tax. Shareholders that are invested in IRAs or other qualified retirement plans are exempt from income taxation under the Code.
Distributions of taxable net investment income (including the excess of net short-term capital gain over net long-term realized capital loss) generally are taxable to shareholders as ordinary income. However, distributions by the Fund to a non-corporate shareholder may be subject to income tax at the shareholder’s applicable tax rate for long-term capital gain, to the extent that the Fund receives qualified dividend income on the securities it holds, the Fund properly designates the distribution as qualified dividend income, and the Fund and the non-corporate shareholder receiving the distribution meets certain holding period and other requirements. Distributions of net
15
realized capital gain (“capital gain dividends”) generally are taxable to shareholders as long-term capital gain, regardless of the length of time the shares of the Trust have been held by such shareholders. Under current law, capital gain dividends recognized by a non-corporate shareholder generally will be taxed at a maximum income tax rate of 20%. Capital gains of corporate shareholders are taxed at the same rate as ordinary income.
Distributions of taxable net investment income and net realized capital gain will be taxable as described above, whether received in additional cash or shares. All distributions of taxable net investment income and net realized capital gain, whether received in shares or in cash, must be reported by each taxable shareholder on his or her federal income tax return. Dividends or distributions declared in October, November or December as of a record date in such a month, if any, will be deemed to have been received by shareholders on December 31, if paid during January of the following year. Redemptions of shares may result in tax consequences (gain or loss) to the shareholder and are also subject to these reporting requirements.
Redemption of Fund shares by a shareholder will result in the recognition of taxable gain or loss in an amount equal to the difference between the amount realized and the shareholder’s tax basis in the shareholder's Fund shares. Such gain or loss is treated as a capital gain or loss if the shares are held as capital assets. However, any loss realized upon the redemption of shares within six months from the date of their purchase will be treated as a long-term capital loss to the extent of any amounts treated as capital gain dividends during such six-month period. All or a portion of any loss realized upon the redemption of shares may be disallowed to the extent shares are purchased (including shares acquired by means of reinvested dividends) within 30 days before or after such redemption.
Under the Code, the Fund will be required to report to the Internal Revenue Service all distributions of taxable income and net realized capital gains as well as gross proceeds from the redemption or exchange of Fund shares, except in the case of certain exempt shareholders. Under the backup withholding provisions of Section 3406 of the Code, distributions of taxable net investment income and net realized capital gain and proceeds from the redemption or exchange of the shares of a regulated investment company may be subject to withholding of federal income tax (currently, at a rate of 28%) in the case of non-exempt shareholders who fail to furnish the investment company with their taxpayer identification numbers and with required certifications regarding their status under the federal income tax law, or if the Fund is notified by the IRS or a broker that withholding is required due to an incorrect TIN or a previous failure to report taxable interest or dividends. If the withholding provisions are applicable, any such distributions and proceeds, whether taken in cash or reinvested in additional shares, will be reduced by the amounts required to be withheld.
For taxable years beginning after December 31, 2012, an additional 3.8% Medicare tax generally will be imposed on certain net investment income (including ordinary dividends and capital gain distributions received from the Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that any such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust) exceeds certain threshold amounts.
Shareholders should consult their tax advisers about the application of federal, state, local and foreign tax law in light of their particular situation.
Should additional series, or funds, be created by the Trustees, each fund would be treated as a separate tax entity for federal income tax purposes.
PRICING OF FUND SHARES
The price (net asset value) of the shares of the Fund is normally determined as of 4:00 p.m., Eastern time on each day the Trust is open for business and on any other day on which there is sufficient trading in the Fund's securities to materially affect the net asset value. The Trust is normally open for business on every day except Saturdays, Sundays and the following holidays: New Year's Day, Martin Luther King Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. The underlying funds are valued at the last reported net asset value.
Securities that are traded on any exchange or on the NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking a last sale price, a long security is valued at its last bid price except when, in the Adviser's opinion, the last bid price does not accurately reflect the current value of the long security. All other long securities for which over-the-counter market quotations are readily available are valued at their last bid price.
16
Lacking a last sale price, a short position is valued at its last ask price except when, in the Adviser’s opinion, the last ask price does not accurately reflect the current value of the short position. All other short positions for which over-the-counter market quotations are available are valued at their last ask price. When market quotations are not readily available, when the Adviser determines the last bid or ask price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review of the Board of Trustees.
Fixed income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices accurately reflect the fair market value of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. If the Adviser 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 Adviser, 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.
SHARES OF THE FUND
The Fund offers Class A shares.
The public offering price for Class A shares of the Fund is the next determined NAV plus a sales charge, as shown on the following table.
|
|
Sales Charge as a % of
|
|
|
|
|
|
|
|
|
|
Financial
|
|
|
|
Public Offering
|
|
Net Amount
|
|
Intermediary
|
|
|
Amount of Investment
|
Price
|
|
Invested
|
|
Commission
1
|
|
|
Less than $50,000
|
5.75%
|
|
6.10%
|
|
5.00%
|
|
|
$50,000 but less than $100,000
|
4.50%
|
|
4.71%
|
|
3.75%
|
|
|
$100,000 but less than $250,000
|
3.75%
|
|
3.90%
|
|
3.00%
|
|
|
$250,000 but less than $500,000
|
3.00%
|
|
3.09%
|
|
2.50%
|
|
|
$500,000 but less than $1,000,000
|
2.00%
|
|
2.04%
|
|
1.50%
|
|
|
$1,000,000 or more
|
None
|
|
None
|
|
None
|
|
|
1
As a percentage of the public offering price.
|
|
|
|
|
|
|
The Fund permits you to reduce the initial sales charge you pay on Class A shares by using the Right of Accumulation or a Letter of Intent. Each of these methods for reducing the initial sales charge on Class A shares is described below. In taking advantage of these methods for reducing the initial sales charge you will pay, you may link your purchases of shares with purchases of shares in accounts owned by your spouse or children under the age of 21 who share your residential address. It is your responsibility when investing to inform your financial intermediary or the Fund that you would like to have one or more accounts linked together for purposes of reducing the initial sales charge.
Right of Accumulation:
You may qualify for a reduction in the initial sales charge for future purchases of Class A shares based on the current market value of your Class A holdings from prior purchases through the Right of Accumulation. To calculate the sales charge applicable to your net purchase of Class A shares, you may aggregate your investment with the current market value of any Class A shares of the Fund held in:
17
|
1.
|
Your account(s);
|
|
|
|
2.
|
Your spouse’s account(s);
|
|
|
|
3.
|
Joint accounts with qualified spouse;
|
|
|
|
4.
|
Account(s) of children under the age of 21 who share your residential address;
|
|
|
|
5.
|
Trust accounts established by any of the individuals in items (1) through (3) above. If the person(s) who established the trust is deceased, the trust account may be aggregated with the account(s) of the primary beneficiary of the trust;
|
|
|
|
6.
|
Solely controlled business accounts; and
|
|
|
|
7.
|
Single-participant retirement plans of any of the individuals in items (1) through (3) above.
|
|
|
In order to obtain any reduction in the initial sales charge, you must, before purchasing Class A shares, inform the Fund or your financial intermediary if you have any of the above types of accounts that can be aggregated with your current investment in Class A shares to reduce the applicable sales charge. In order to verify your eligibility for a reduced sales charge, you may be required to provide appropriate documentation, such as an account statement or the social security or tax identification number on an account, so that the Fund may verify (1) the number of shares of the Fund held in your account(s) with the Fund, (2) the number of shares of the Fund held in your account(s) with a financial intermediary, and (3) the number of shares of the Fund held in an account with a financial intermediary owned by your spouse or by children under the age of 21 who share your residential address.
Letter of Intent:
You may purchase Class A shares at the sales charge rate applicable to the total amount of the purchases you intend to make over a 13-month period. The Fund will combine the value of your current purchases with the current value of any Class A shares you purchased previously for (i) your account, (ii) your spouse’s account, (iii) a joint account with your spouse, or (iv) your minor children’s trust or custodial accounts. In calculating the total amount of purchases, you may include in your letter purchases made up to 90 days before the date of the Letter of Intent. A fiduciary purchasing shares for the same fiduciary account, trust or estate may also consider the value of Class A shares purchased previously that were sold subject to a sales charge. In other words, a Letter of Intent allows you to purchase Class A shares of the Fund over a 13-month period and receive the same sales charge as if you had purchased all the shares at the same time. The Fund will also consider the value of Class A shares sold at NAV. Class A shares purchased with dividends or distributions will not be included in the calculation. To be entitled to a reduced sales charge on the purchase of Class A shares based on shares you intend to purchase over the 13-month period, you must send the Fund a Letter of Intent. The 13-month period begins on the date of the first purchase, including those purchases made in the 90-day period before the date of the Letter of Intent. Please note that the purchase price of these prior purchases will not be adjusted.
You are not legally bound by the terms of your Letter of Intent to purchase the amount of shares stated in the Letter of Intent. The Letter of Intent does, however, authorize the Fund to hold in escrow 5.00% of the total amount you intend to purchase. If you do not complete the total intended purchase of Class A shares at the end of the 13-month period, the Fund’s transfer agent will redeem the necessary portion of the escrowed shares to make up the difference between the reduced sales charge rate (based on the amount you intended to purchase) and the sales charge rate that would normally apply (based on the actual amount you purchased).
Sales Charge Waivers
Sales charges may be waived for the following:
No sales charge is imposed on Class A shares of the Fund if the shares were:
|
1.
|
Bought by officers, directors or trustees, and employees and their immediate family members (i.e., spouses, children, grandchildren, parents, grandparents and any dependent of the person, as defined in section 152 of the Internal Revenue Code) of:
|
|
|
|
|
|
Neiman Funds;
|
|
|
|
|
|
Neiman Funds Management LLC and its subsidiaries and affiliates;
|
|
|
18
|
|
• PageOne Funds Management, LLC and its subsidiaries and affiliates;
|
|
|
|
|
• The Distributor and its subsidiaries and affiliates; or
|
|
|
|
|
• Broker-dealers or financial institutions that have entered into dealer agreements with the Funds or their principal underwriter and their subsidiaries and affiliates (or otherwise have an arrangement with a broker-dealer or financial institution with respect to sales of Fund shares).
|
|
|
|
2.
|
Bought by advisory clients of Neiman Funds Management LLC and its subsidiaries and affiliates or bought by advisory clients of PageOne Funds Management, LLC and its subsidiaries and affiliates.
|
|
|
|
3.
|
Bought by certain retirement and deferred compensation plans, and trusts used to fund those plans, including, but not limited to, those plans qualified under sections 401(k), 403(b) or 457 of the Internal Revenue Code and “rabbi trusts.”
|
|
|
|
4.
|
Bought by Financial Intermediaries who have a dealer arrangement with the Distributor, who place trades for their own accounts or for the accounts of their clients and who charge a management, asset allocation, consulting or other fee for their services, or clients of such Financial Intermediaries who place trades for their own accounts if the accounts are linked to the master account of such financial intermediary.
|
|
|
|
5.
|
Bought by an investment adviser, broker-dealer or financial planner, provided arrangements are pre- approved.
|
|
|
|
6.
|
Bought by a bank, trust company or thrift institution which is acting as a fiduciary exercising investment discretion, provided that appropriate notification of such a fiduciary relationship is reported at the time of the investment to the Fund or the Fund’s Distributor.
|
|
|
|
7.
|
Bought by employer-sponsored health savings accounts.
|
|
|
|
8.
|
Bought with proceeds from the sale of Class A shares of the Fund, but only if the purchase is made within
|
|
|
|
|
90
|
days of the sale or distribution. Appropriate documentation may be required. Exercising the
|
|
|
|
|
reinvestment privilege will not affect the character of any gain or loss realized on the redemption for federal income tax purposes, except that if the redemptions resulted in a loss, the reinvestment may result in the loss being disallowed under the “wash sale” rules.
|
|
|
|
9.
|
Bought in connection with plans of reorganizations of the Fund, such as mergers, asset acquisitions and exchange offers to which the Fund is a party.
|
|
|
|
10.
|
Bought by a “charitable organization” as defined for purposes of Section 501(c)(3) of the Internal Revenue Code, or by a charitable remainder trust or life income pool established for the benefit of a charitable organization.
|
|
|
These waivers may not continue indefinitely and may be discontinued at any time without notice.
Additional Purchase
Generally, all purchases must be made in cash. However, the Fund reserves the right to accept payment in readily marketable securities instead of cash in accordance with procedures approved by the Fund’s Board of Trustees. If payment is made in securities, the Fund will value the securities in the same manner in which it computes its NAV.
DISTRIBUTION PLAN
The Fund has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the “Plan”) that allows the Fund to pay distribution and other fees (“Rule 12b-1 Fees”) for the sale and distribution of the Fund’s shares and for services provided to shareholders by the Distributor or the Adviser. The Plan permits the Fund to pay the Distributor and the Adviser Rule 12b-1 Fees as compensation for services and expenses in connection with the distribution of Fund shares. The Distributor must approve all payments made under the plan and may pay any or all
19
amounts received under the Plan to other persons, including the Adviser, for any distribution, promotional or shareholder support services. Up to 0.25% of the Rule 12b-1 Fee may be used as a shareholder servicing fee. The Class A Shares pay an annual Rule 12b-1 Fee equal to 0.25% of its average daily net assets. Because these fees are paid out of the Fund’s assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. During the fiscal period ended March 31, 2013, there was $69,585 of Rule 12b-1 Fees incurred by Class A.
Under the Plan, the Fund may engage in any activities related to the distribution of Fund shares, including without limitation the following: (a) payments, including incentive compensation, to securities dealers or other financial intermediaries, financial institutions, investment advisers and others that are engaged in the sale of shares of the Fund, or that may be advising shareholders of the Fund regarding the purchase, sale or retention of shares of the Fund or that holds Fund shares in omnibus accounts or as shareholder of record, or provides shareholder or administrative services to the Fund and its shareholders; (b) expenses of maintaining personnel (including personnel of organizations with which the Fund has entered into agreements related to the Plan) who engage in or support distribution of shares of the Fund; (c) costs of preparing, printing and distributing prospectuses and statements of additional information and reports of the Fund for recipients other than existing shareholders of the Fund; (d) costs of formulating and implementing marketing and promotional activities, including, but not limited to, sales seminars, direct mail promotions and television, radio, newspaper, magazine and other mass media advertising; (e) costs of preparing, printing and distributing sales literature; (f) costs of obtaining such information, analyses and reports with respect to marketing and promotional activities as the Fund may, from time to time, deem advisable; (g) costs of implementing and operating the Plan; (h) payments made to intermediaries that that render shareholder support services not otherwise provided by the Fund’s transfer agent, including, but not limited to, expenses related processing new account applications, transmitting customer transaction information to the Fund’s transfer agent, answering routine shareholder inquiries, providing office space, equipment and telephone facilities, and providing such other shareholder services as the Fund may reasonably request.
Quarterly reports of the amounts expended under the Plan, and the purposes for which such expenditures were incurred, must be made to the Board for its review. The following are the principal types of activities for which payments were made, and the amounts for each, for the fiscal period ended March 31, 2013:
|
Expense Type
|
|
Class A
|
|
Advertising
|
|
$9,063
|
|
Printing and postage
|
|
-
|
|
Compensation to underwriter
|
|
-
|
|
Compensation to broker-dealers
|
|
31,145
|
|
Compensation to sales personnel
|
|
|
|
Other
|
|
-
|
|
|
|
$40,208
|
The Trustees expect that the Plan could significantly enhance the Fund’s ability to expand distribution of shares of the Fund. It is also anticipated that an increase in the size of the Fund will produce economies of scale that benefit the shareholders, facilitate more efficient portfolio management, and assist the Fund in seeking to achieve its investment objective.
The Plan has been approved by the Fund’s Board of Trustees, including a majority of the Trustees who are not “interested persons” of the Fund and who have no direct or indirect financial interest in the Plan or any related agreement, by a vote cast in person. Continuation of the Plan and the related agreements must be approved by the Trustees annually, in the same manner, and the Plan or any related agreement may be terminated at any time without penalty by a majority of such independent Trustees or by a majority of the outstanding shares of the Fund. Any amendment increasing the maximum percentage payable under the Plan or other material change must be approved by a majority of the outstanding shares of the Fund, and all other material amendments to the Plan or any related agreement must be approved by a majority of the independent Trustees.
The Trust understands that service organizations may charge fees to their customers who are the beneficial owners of the Fund, in connection with their accounts with such service organizations. Any such fees are
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not within and would be in addition to any amounts which may be received by an institution under the applicable 12b-1 Plan. Under the terms of each servicing agreement entered into with the Trust, service organizations are required to provide to their customers a schedule of any fees that they may charge in connection with customer investments in the Fund.
Finder’s Fee Commissions
Financial intermediaries who sell $1 million or more of Class A shares in the aggregate of the Fund may receive a finder’s fee. If any defined contribution plan redeems within 18 months of the purchase date all of the shares for which a finder’s fee has been paid, the Adviser may reclaim the finder’s fee paid to the financial intermediary rather than charge a contingent deferred sales charge to the plan. The Adviser reserves the right to alter or change the finder’s fee policy at any time.
Finder’s Fees Paid in the last Fiscal Year
No finder’s fees were paid in the last fiscal year.
Payment of Additional Cash Compensation
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On occasion, the Adviser may make payments out of its resources and legitimate profits, which may include profits the Adviser derives from investment advisory fees paid by the Fund, to financial intermediaries as incentives to market the Fund, to cooperate with the Adviser’s promotional efforts, or in recognition of the provision of administrative services and marketing and/or processing support. These payments are often referred to as “additional cash compensation” and are in addition to the sales charges, Rule 12-1 fees, and payments to financial intermediaries as discussed above. The payments are made pursuant to agreements between financial intermediaries and the Adviser and do not affect the price investors pay to purchase shares of the Fund, the amount the Fund will receive as proceeds from such sales, or the amount of Rule 12b-1 fees and other the expenses paid by the Fund.
Additional cash compensation payments may be used to pay financial intermediaries for: (1) transaction support, including any one-time charges for establishing access to Fund shares on particular trading systems (known as “platform access fees”); (2) program support, such as expenses related to including the Funds in retirement programs, fee-based advisory or wrap fee programs, fund supermarkets, bank or trust company products, and/or insurance programs (e.g., individual or group annuity contracts); (3) marketing support, such as providing representatives of the Adviser access to sales meetings, sales representatives and management representatives; (4) firm support, such as business planning assistance, advertising, and assistance with educating sales personnel about the Funds and shareholder financial planning needs; (5) providing shareholder and administrative services; and (6) providing other distribution-related or asset retention services.
Additional cash compensation payments generally are structured as basis point payments on gross or net sales or, in the case of platform access fees, fixed dollar amounts.
In addition to member firms of the Financial Industry Regulatory Authority, Inc. (“FINRA”), the Adviser or Distributor also reserves the ability to make payments, as described above, to other financial intermediaries that sell or provide services to the Fund and shareholders, such as banks, insurance companies, and plan administrators. These firms may include affiliates of the Adviser. You should ask your financial intermediary whether it receives additional cash compensation payments, as described above, from the Adviser or Distributor or their respective affiliates.
The Adviser, the Distributor and their affiliates also may pay non-cash compensation to financial intermediaries and their representatives in the form of (1) occasional gifts; (2) occasional meals, tickets or other entertainment; and/or (3) sponsorship support of regional or national conferences or seminars. Such non-cash compensation will be made subject to applicable law.
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PURCHASES AND SALES THROUGH BROKER DEALERS
The Fund may be purchased through broker dealers and other intermediaries. The Fund has authorized one or more brokers to receive on its behalf purchase and redemption orders. Such brokers are authorized to designate other intermediaries to receive purchase and redemption orders on the Fund's behalf. The Fund will be deemed to have received a purchase or redemption order when an authorized broker or, if applicable, a broker's authorized designee, received the order. Customer orders will be priced at the Fund's net asset value next computed after they are received by an authorized broker or the broker's authorized designee.
ANTI-MONEY LAUNDERING PROGRAM
The Trust has established an Anti-Money Laundering Compliance Program (the “Program”) as required by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”). To ensure compliance with this law, the Program provides for the development of internal practices, procedures and controls, designation of anti-money laundering compliance officers, an ongoing training program and an independent audit function to determine the effectiveness of the Program.
Procedures to implement the Program include, but are not limited to, determining that the Fund’s transfer agent has established proper anti-money laundering procedures, reporting suspicious and/or fraudulent activity and a complete and thorough review of all new account applications. The Fund will not transact business with any person or entity whose identity cannot be adequately verified under the provisions of the USA PATRIOT Act.
CUSTODIAN
US Bank N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is custodian of the Fund's investments. The custodian acts as the Fund's depository, safekeeps its portfolio securities, collects all income and other payments with respect thereto, disburses funds at the Fund's request and maintains records in connection with its duties.
FUND SERVICES
Mutual Shareholder Services, LLC (“MSS”), 8000 Town Centre Drive, Suite 400, Broadview Heights, OH 44147, acts as the Fund's transfer agent. MSS maintains the records of the shareholders’ accounts, answers shareholders' inquiries concerning their accounts, processes purchases and redemptions of the Fund's shares, acts as dividend and distribution disbursing agent and performs other transfer agent and shareholder service functions. MSS receives an annual fee of $11.50 per shareholder (subject to a minimum monthly fee of $775 per Fund) for these transfer agency services.
In addition, MSS provides the Fund with fund accounting services, which includes certain monthly reports, record-keeping and other management-related services. For its services as fund accountant, MSS receives an annual fee based on the average value of the Fund. These fees are: from $0 to $25 million in assets the annual fee is $22,200, from $25 million to $50 million in assets the annual fee is $31,700, from $50 million to $75 million in assets the annual fee is $37,450, from $75 million to $100 million in assets the annual fee is $43,200, from $100 million to $125 million in assets the annual fee is $48,950, from $125 million to $150 million in assets the annual fee is $54,700, from $150 million to $200 million in assets the annual fee is $60,450, from $200 million to $300 million in assets the annual fee is $60,450 plus .01% on assets greater than $200 million and above $300 in assets the annual fee is $70,450 plus .005% on assets greater than $300 million. For the fiscal period ended March 31, 2013. the Fund paid MSS $30,343 for transfer agent and accounting services.
Premier Fund Solutions, Inc. (“PFS”) provides the Fund with administrative services, including regulatory reporting and necessary office equipment, personnel and facilities. PFS receives a monthly fee from the Fund equal to an annual rate of 0.07% of the Fund's assets under $200 million, 0.05% of the next $500 million of the Fund's average daily net assets, and 0.03% of the average daily net assets of the Fund thereafter (subject to a minimum monthly fee of $2,000 for the first class and an additional $500 for each additional class). For the fiscal period ended March 31, 2013, the Fund paid PFS $21,875.
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of Cohen Fund Audit Services, Ltd., 1350 Euclid Ave., Suite 800, Cleveland, OH 44115, has been selected as independent registered public accounting firm for the Fund for the fiscal year ending March 31, 2014. Cohen Fund Audit Services, Ltd. performs an annual audit of the Fund's financial statements and provides financial, tax and accounting consulting services as requested.
DISTRIBUTOR
Rafferty Capital Markets, LLC (the “Distributor”), located at located at 1010 Franklin Avenue, Suite 101 - 3rd Floor, Garden City, NY 11530, serves as the principal underwriter of the Fund’s shares. The Distributor is a broker-dealer and acts as the Fund’s principal underwriter in a continuous public offering of the Fund’s shares. For the fiscal period ended March 31, 2013, the Distributor was compensated $2,783 for services provided to the Fund. Compensation for the services performed by the Distributor is paid by the Adviser from its own resources and/or from available distribution fees (see “Distribution Plan” above).
DISCLOSURE OF PORTFOLIO HOLDINGS
The Fund is required to include a schedule of portfolio holdings in its annual and semi-annual reports to shareholders, which are sent to shareholders within 60 days of the end of the second and fourth fiscal quarters and which are filed with the SEC on Form N-CSR within 70 days of the end of the second and fourth fiscal quarters. The Fund also is required to file a schedule of portfolio holdings with the SEC on Form N-Q within 60 days of the end of the first and third fiscal quarters. The Fund must provide a copy of the complete schedule of portfolio holdings as filed with the SEC to any shareholder of the Fund, upon request, free of charge. This policy is applied uniformly to all shareholders of the Fund without regard to the type of requesting shareholder (i.e., regardless of whether the shareholder is an individual or institutional investor). Information contained in annual and semi-annual reports mailed to shareholders, as well as information filed with the SEC on Form N-Q and information posted on the Fund’s website, is public information. All other information is non-public information.
The Fund has an ongoing relationship with third party servicing agents to release portfolio holdings information on a daily basis in order for those parties to perform their duties on behalf of the Fund. These third party servicing agents are the Adviser, Transfer Agent, Fund Accounting Agent, Administrator and Custodian. The Fund also may disclose portfolio holdings, as needed, to auditors, legal counsel, proxy voting services (if applicable), pricing services, printers, parties to merger and reorganization agreements and their agents, and prospective or newly hired investment advisers or sub-advisers. The lag between the date of the information and the date on which the information is disclosed will vary based on the identity of the party to whom the information is disclosed. For instance, the information may be provided to auditors within days of the end of an annual period, while the information may be given to legal counsel or prospective sub-advisers at any time. This information is disclosed to all such third parties under conditions of confidentiality. “Conditions of confidentiality” include (i) confidentiality clauses in written agreements, (ii) confidentiality implied by the nature of the relationship (e.g., attorney-client relationship), (iii) confidentiality required by fiduciary or regulatory principles (e.g., custody relationships) or (iv) understandings or expectations between the parties that the information will be kept confidential. The Fund also releases information to Morningstar on a delayed basis after the information has been filed with the SEC or otherwise made public. The Fund believes, based upon its size and history, that these are reasonable procedures to protect the confidentiality of the Fund’s portfolio holdings and will provide sufficient protection against personal trading based on the information.
Except as provided above, the Fund is prohibited from entering into any arrangements with any person to make available information about the Fund’s portfolio holdings without the specific approval of the Board. The Adviser must submit any proposed arrangement pursuant to which the Adviser intends to disclose the Fund’s portfolio holdings to the Board, which will review such arrangement to determine (i) whether it is in the best interests of Fund shareholders, (ii) whether the information will be kept confidential and (iii) whether the disclosure presents a conflict of interest between the interests of Fund shareholders and those of the Adviser, or any affiliated person of the Fund, or the Adviser. Additionally, the Fund, the Adviser, and any affiliated persons of the Adviser, are prohibited from receiving compensation or other consideration, for themselves or on behalf of the Fund, as a result of disclosing the Fund’s portfolio holdings.
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FINANCIAL STATEMENTS
The financial statements and independent registered public accounting firm’s report required to be included in the Statement of Additional Information are incorporated herein by reference to the Fund’s Annual Report to Shareholders for the year ended March 31, 2013. The Trust will provide the Annual Report without charge at written or telephone request.
PROXY VOTING STATEMENT
The Board of Trustees of the Trust has delegated responsibilities for decisions regarding proxy voting for securities held by the Fund to the Adviser. The Adviser will vote such proxies in accordance with its proxy policies and procedure. In some instances, the Adviser may be asked to cast a proxy vote that presents a conflict between the interests of the Fund’s shareholders, and those of the Adviser or an affiliated person of the Adviser. In such a case, the Trust’s policy requires that the Adviser abstain from making a voting decision and to forward all necessary proxy voting materials to the Trust to enable the Board of Trustees to make a voting decision. When the Board of Trustees of the Trust is required to make a proxy voting decision, only the Trustees without a conflict of interest with regard to the security in question or the matter to be voted upon shall be permitted to participate in the decision of how the Fund’s vote will be cast.
The Adviser’s proxy voting policies and procedures are attached as Appendix A to this Statement of Additional Information.
MORE INFORMATION. The actual voting records relating to portfolio securities during the most recent 12-Month period ended June 30 will be available after August 31 without charge, upon request by calling toll-free, 1-877-385-2720 or by accessing the SEC’s website at www.sec.gov. In addition, a copy of the Fund’s proxy voting policies and procedures are also available by calling 1-877-385-2720 and will be sent within three business days of receipt of a request.
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