CLOUD, NEFF CAPITAL APPRECIATION FUND
PROSPECTUS
JUNE 1, 2000
Investment objective: Long term capital appreciation.
5314 South Yale, Suite 606
Tulsa, OK 74135
Toll Free (888) 464-6815
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
PAGE
RISK RETURN SUMMARY..........................................................3
FEES AND EXPENSES OF INVESTING IN THE FUND...................................5
HOW TO BUY SHARES............................................................6
HOW TO REDEEM SHARES.........................................................8
DETERMINATION OF NET ASSET VALUE............................................10
DIVIDENDS, DISTRIBUTIONS AND TAXES..........................................10
MANAGEMENT OF THE FUND......................................................11
FOR MORE INFORMATION................................................BACK COVER
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RISK RETURN SUMMARY
INVESTMENT OBJECTIVE
The investment objective of the Cloud, Neff Capital Appreciation Fund is
long term capital appreciation.
PRINCIPAL STRATEGIES
The Fund invests primarily in common stocks of large capitalization U.S.
companies (those with market capitalizations above $5 billion). The Fund's
adviser uses fundamental analysis to select securities of companies that it
believes have potential for strong earnings growth and increasing demand for the
goods or services they produce. The factors analyzed include revenue and
earnings growth rate, return on reinvested profits, consistency of earnings
growth, and management history of quickly reacting to changing business trends.
The Fund's adviser seeks companies that it believes are reasonably priced
when compared to other companies in the same industry and peer group. The
adviser also seeks companies that it believes will be able to grow earnings in
changing interest rate environments and that are internationally diversified.
The adviser favors companies that are dominant in their respective industry
groups, based on market share and/or market capitalization. The Fund will sell a
security when the adviser determines that the security has become fully valued,
that the company demonstrates weakened earnings potential, or that other
companies offer better long term growth characteristics.
While it is anticipated that the Fund will diversify its investments
across a range of industries and industry sectors, certain sectors are likely to
be overweighted compared to others because the Fund's adviser seeks the best
investment values regardless of sector. The Fund may, for example, be
overweighted at times in the technology, pharmaceutical and financial services
sectors. The sectors in which the Fund may be overweighted will vary at
different points in the economic cycle.
PRINCIPAL RISKS OF INVESTING IN THE FUND
o MANAGEMENT RISK. The adviser's strategy may fail to produce the intended
results. Additionally the Fund has no operating history and the Fund's
adviser has no prior experience managing the assets of a mutual fund.
o COMPANY RISK. The value of the Fund may decrease in response to the
activities and financial prospects of an individual company in the Fund's
portfolio.
o VOLATILITY RISK. Common stocks tend to be more volatile than other investment
choices. The value of an individual company can be more volatile than the
market as a whole. This volatility affects the value of the Fund's shares.
o MARKET RISK. Overall stock market risks may also affect the value of the
Fund. Factors such as domestic economic growth and market conditions,
interest rate levels, and political events affect the securities markets.
o SECTOR RISK. If the Fund's portfolio is overweighted in a certain industry
sector, any negative development affecting that sector will have a greater
impact on the Fund than a fund that is not overweighted in that sector. For
example, to the extent the Fund is overweighted in the technology sector, it
will be affected by developments affecting that sector.
o Technology companies may be significantly affected by falling prices and
profits and intense competition, and their products may be subject to
rapid obsolescence
o The pharmaceutical sector is subject to government regulation and
government approval of products, which could have a significant effect on
price and availability. Pharmaceutical companies can be significantly
affected by intense competition, and their products may be subject to
rapid obsolescence.
o The financial services industries are subject to extensive government
regulation. Changes or proposed changes in these regulations may adversely
impact the industry. For example, regulatory changes may make the industry
more competitive and some compaies may be negatively affected. The
profitability of companies in the financial services industries can be
significantly affected by the cost of capital, changes in interest rates,
and price competition.
o An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
o The Fund may not be appropriate for use as a complete investment program.
o As with any mutual fund investment, the Fund's returns will vary and you
could lose money.
GENERAL
The investment objective of the Fund may be changed without shareholder
approval.
From time to time, the Fund may take temporary defensive positions, which
are inconsistent with the Fund's principal investment strategies, in attempting
to respond to adverse market, economic, political, or other conditions. For
example, the Fund may hold all or a portion of its assets in money market
instruments, including money market funds or repurchase agreements. If the Fund
invests in a money market fund, the shareholders of the Fund generally will be
subject to duplicative management fees. As a result of engaging in these
temporary measures, the Fund may not achieve its investment objective. The Fund
may also invest in money market instruments at any time to maintain liquidity or
pending selection of investments in accordance with its policies.
In addition, the Fund may invest to a limited degree in S&P Depositary
Receipts ("SPDRs") and Nasdaq-100 Shares pending selection of investments in
accordance with its policies. SPDRs are exchange-traded shares that represent
ownership in the SPDR Trust, an investment company which was established to own
the stocks included in the S&P 500 Index. Nasdaq-100 Shares are similar to
SPDRs, but own the stocks that comprise the Nasdaq 100 Index. The price and
dividend yield of these securities track the movement of the corresponding index
relatively closely. The Fund will indirectly bear its proportionate share of any
fees and expenses paid by the exchange-traded shares in which it invests in
addition to the fees and expenses payable directly by the Fund. Therefore, the
Fund will incur higher expenses, many of which may be duplicative.
The Nasdaq 100 Shares invest in smaller capitalization companies and are
subject to the risks associated with smaller companies. The earnings and
prospects of smaller companies are more volatile than larger companies. Smaller
companies may experience higher failure rates than do larger companies. The
trading volume of securities of smaller 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. Smaller companies may have limited markets,
product lines or financial resources and may lack management experience.
HOW THE FUND HAS PERFORMED
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. The Bar Chart and Performance Table that would otherwise appear in this
prospectus have been omitted because the Fund is recently organized and has
annual returns of less than one year.
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FEES AND EXPENSES OF THE FUND
The tables describe the fees and estimated expenses that you may pay if you buy
and hold shares of the Fund.
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases NONE
Maximum Deferred Sales Charge (Load) NONE
Redemption Fee NONE
ANNUAL FUND OPERATING EXPENSES1
(expenses that are deducted from Fund assets)
Management Fee 2.00%
Distribution and/or Service (12b-1) Fees NONE
Other Expenses 0.60%
Total Annual Fund Operating Expenses 2.60%
1 Expenses are based on estimated amounts for the current fiscal year.
Example:
This 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, reinvest dividends
and distributions, and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS
------ -------
$267 $818
HOW TO BUY SHARES
INITIAL PURCHASE
The minimum initial investment in the Fund is $100,000. Investors choosing
to purchase or redeem their shares through a broker/dealer or other institution
may be charged a fee by that institution. To the extent investments of
individual investors are aggregated into an omnibus account established by an
investment adviser, broker or other intermediary, the account minimums apply to
the omnibus account, not to the account of the individual investor. Account
minimums may be waived for clients of the Fund's adviser.
BY MAIL - To be in proper form, your initial purchase request must
include: o a completed and signed investment application form (which accompanies
this Prospectus);
o a check made payable to the Fund;
Mail the application and check to:
U.S. Mail: Overnight:
Cloud, Neff Capital Appreciation Fund Cloud, Neff Capital Appreciation Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46206-6110 Indianapolis, Indiana 46204
BY WIRE - You may also purchase shares of the Fund by wiring federal funds
from your bank, which may charge you a fee for doing so. To wire money, you must
call Unified Fund Services, Inc., the Fund's transfer agent, at (888) 464-6815
to set up your account and obtain an account number. You should be prepared at
that time to provide the information on the application. Then, provide your bank
with the following information for purposes of wiring your investment:
Firstar Bank, N.A.
ABA #0420-0001-3
Attn: Cloud, Neff Capital Appreciation Fund
D.D.A.# 821661790
Account Name _________________ (write in shareholder name)
For the Account # ______________ (write in account number)
You must mail a signed application to Unified Fund Services, Inc., the
Fund's transfer agent, at the above address in order to complete your initial
wire purchase. Wire orders will be accepted only on a day on which the Fund,
custodian and transfer agent are open for business. A wire purchase will not be
considered made until the wired money is received and the purchase is accepted
by the Fund. Any delays which may occur in wiring money, including delays which
may occur in processing by the banks, are not the responsibility of the Fund or
the Transfer agent. There is presently no fee for the receipt of wired funds,
but the Fund may charge shareholders for this service in the future.
ADDITIONAL INVESTMENTS
You may purchase additional shares of the Fund by mail, wire, or automatic
investment. Each additional mail purchase request must contain: o your name o
the name of your account(s), o your account number(s), o the name of the Fund o
a check made payable to the Fund Send your purchase request to the address
listed above. A bank wire should be sent as outlined above.
TAX SHELTERED RETIREMENT PLANS
Since the Fund is oriented to longer term investments, shares of the Fund
may be an appropriate investment medium for tax sheltered retirement plans,
including: individual retirement plans (IRAs); simplified employee pensions
(SEPs); SIMPLE plans; 401(k) plans; qualified corporate pension and profit
sharing plans (for employees); tax deferred investment plans (for employees of
public school systems and certain types of charitable organizations); and other
qualified retirement plans. Contact the Transfer agent for the procedure to open
an IRA or SEP plan and more specific information regarding these retirement plan
options. Please consult with your attorney or tax adviser regarding these plans.
You must pay custodial fees for your IRA by redemption of sufficient shares of
the Fund from the IRA unless you pay the fees directly to the IRA custodian.
Call the Transfer agent about the IRA custodial fees.
OTHER PURCHASE INFORMATION
The Fund may limit the amount of purchases and refuse to sell to any
person. If your check or wire does not clear, you will be responsible for any
loss incurred by the Fund. If you are already a shareholder, the Fund can redeem
shares from any identically registered account in the Fund as reimbursement for
any loss incurred. You may be prohibited or restricted from making future
purchases in the Fund.
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HOW TO REDEEM SHARES
You may receive redemption payments in the form of a check or federal wire
transfer. Presently there is no charge for wire redemptions; however, the Fund
may charge for this service in the future. Any charges for wire redemptions will
be deducted from the shareholder's Fund account by redemption of shares. If you
redeem your shares through a broker/dealer or other institution, you may be
charged a fee by that institution.
BY MAIL - You may redeem any part of your account in the Fund at no charge
by mail. Your request should be addressed to:
Cloud, Neff Capital Appreciation Fund
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
Proper order means your request for a redemption must include: o the Fund
name and account number, o account name(s) and address, o the dollar amount or
number of shares you wish to redeem.
Requests to sell shares are processed at the net asset value next
calculated after we receive your order in proper form. To be in proper order,
your request must be signed by all registered share owner(s) in the exact
name(s) and any special capacity in which they are registered. The Fund may
require that signatures be guaranteed by a bank or member firm of a national
securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of the Fund or Unified Fund Services, Inc., you
may be required to furnish additional legal documents to insure proper
authorization.
BY TELEPHONE - You may redeem any part of your account in the Fund by
calling the transfer agent at (888) 464-6815. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the transfer agent and the custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The Fund may terminate the telephone redemption procedures at any time.
During periods of extreme market activity it is possible that shareholders may
encounter some difficulty in telephoning the Fund, although neither the Fund nor
the transfer agent has ever experienced difficulties in receiving and in a
timely fashion responding to telephone requests for redemptions or exchanges. If
you are unable to reach the Fund by telephone, you may request a redemption or
exchange by mail.
ADDITIONAL INFORMATION - If you are not certain of the requirements for a
redemption please call the transfer agent at (888) 464-6815. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing or under any emergency circumstances, as
determined by the Securities and Exchange Commission, the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund may require you to redeem all of your shares in the Fund on
30 days' written notice if the value of your shares in the Fund is less than
$5,000 due to redemption, or such other minimum amount as the Fund may determine
from time to time. An involuntary redemption constitutes a sale. You should
consult your tax adviser concerning the tax consequences of involuntary
redemptions. You may increase the value of your shares in the Fund to the
minimum amount within the 30 day period. Your shares are subject to redemption
at any time if the Board of Trustees determines in its sole discretion that
failure to so redeem may have materially adverse consequences to all or any of
the shareholders of the Fund.
DETERMINATION OF NET ASSET VALUE
The price you pay for your shares is based on the applicable Fund's net
asset value per share (NAV). The NAV is calculated at the close of trading
(normally 4:00 p.m. Eastern time) on each day the New York Stock Exchange is
open for business (the Stock Exchange is closed on weekends, Federal holidays
and Good Friday). The NAV is calculated by dividing the value of the Fund's
total assets (including interest and dividends accrued but not yet received)
minus liabilities (including accrued expenses) by the total number of shares
outstanding.
The Fund's assets are generally valued at their market value. If market
prices are not available, or if an event occurs after the close of the trading
market that materially affects the values, assets may be valued by the Fund's
adviser at their fair value, according to procedures approved by the Fund's
Board of Trustees. The Fund may own securities that are traded primarily on
foreign exchanges that trade on weekends or other days that the Fund does not
price its shares. As a result, the NAV of the Fund may change on days when you
will not be able to purchase or redeem your shares of the fund.
Requests to purchase and sell shares are processed at the NAV next
calculated after we receive your order in proper form.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Fund typically distributes substantially all of its net investment
income in the form of dividends and taxable capital gains to its shareholders.
These distributions are automatically reinvested in the Fund unless you request
cash distributions on your application or through a written request to the Fund.
The Fund expects that its distributions will consist primarily of capital gains.
TAXES
In general, selling or exchanging shares of the Fund and receiving
distributions (whether reinvested or taken in cash) are taxable events.
Depending on the purchase price and the sale price, you may have a gain or a
loss on any shares sold. Any tax liabilities generated by your transactions or
by receiving distributions are your responsibility. You may want to avoid making
a substantial investment when the Fund is about to make a long term capital
gains distribution because you would be responsible for any taxes on the
distribution regardless of how long you have owned your shares.
Early each year, the Fund will mail to you a statement setting forth the
federal income tax information for all distributions made during the previous
year. If you do not provide your taxpayer identification number, your account
will be subject to backup withholding.
The tax considerations described in this section do not apply to
tax-deferred accounts or other non-taxable entities. Because each investor's tax
circumstances are unique, please consult with your tax adviser about your
investment.
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MANAGEMENT OF THE FUND
Cloud, Neff & Associates, Inc., 5314 South Yale, Suite 606, Tulsa, OK
74135, serves as investment adviser to the Fund. Cloud, Neff has been managing
discretionary investment Funds since 1990. The firm serves pension plans,
trusts, individuals, and all other forms of investment clients. The firm's
primary goal is the management of domestic equity portfolios. As of December 31,
1999, Cloud, Neff had approximately $20 million under management. The Fund is
authorized to pay the adviser a fee equal to 2.00% of its average daily net
assets.
Cloud, Neff was founded in 1990 by Richard R. Cloud and David L. Neff, CPA.
Mr. Neff is the President of Cloud, Neff. Mr. Cloud is the vice president of the
firm and has primary responsibility for management of equity accounts. From 1990
to 1995, both were registered representatives of the broker dealer subsidiary of
Phoenix Home Life. Richard R. Cloud has been primarily responsible for the day
to day management of the Fund since its inception.
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.
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FOR MORE INFORMATION
Several additional sources of information are available to you. The
Statement of Additional Information (SAI), incorporated into this prospectus by
reference, contains detailed information on Fund policies and operations. Annual
and semi-annual reports contain management's discussion of market conditions,
investment strategies and performance results as of the Funds' latest
semi-annual or annual fiscal year end.
Call the Fund at (888) 464-6815 to request free copies of the SAI and the
Fund's annual and semi-annual reports, to request other information about the
Fund and to make shareholder inquiries.
You may review and copy information about the Fund (including the SAI and
other reports) at the Securities and Exchange Commission (SEC) Public Reference
Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours and
operation. You may also obtain reports and other information about the Fund on
the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by
electronic request at the following e-mail address: [email protected], or by
writing the SEC's Public Reference Section of the SEC, Washington, D.C.
20549-0102.
Investment Company Act #811-09541
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CLOUD, NEFF CAPITAL APPRECIATION FUND
STATEMENT OF ADDITIONAL INFORMATION
JUNE 1, 2000
This Statement of Additional Information ("SAI") is not a prospectus. It
should be read in conjunction with the Prospectus of Cloud, Neff Capital
Appreciation Fund dated June 1, 2000. A free copy of the Prospectus can be
obtained by writing the Transfer Agent at 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, or by calling 1-888-464-6815.
TABLE OF CONTENTS PAGE
DESCRIPTION OF THE TRUST AND THE FUND..........................................2
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS................................................................3
INVESTMENT LIMITATIONS.........................................................4
THE INVESTMENT ADVISER ........................................................6
TRUSTEES AND OFFICERS..........................................................7
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................................8
DETERMINATION OF SHARE PRICE...................................................9
INVESTMENT PERFORMANCE.........................................................9
CUSTODIAN.....................................................................10
TRANSFER AGENT................................................................10
ACCOUNTANTS...................................................................11
DISTRIBUTOR...................................................................11
ADMINISTRATOR.................................................................11
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DESCRIPTION OF THE TRUST AND THE FUND
The Cloud, Neff Capital Appreciation Fund (the "Fund") was organized as a
diversified series of AmeriPrime Advisors Trust (the "Trust") on April 10, 2000.
The Trust is an open-end investment company established under the laws of Ohio
by an Agreement and Declaration of Trust dated August 3, 1999 (the "Trust
Agreement"). The Trust Agreement permits the Trustees to issue an unlimited
number of shares of beneficial interest of separate series without par value.
The Fund is one of a series of funds currently authorized by the Trustees. The
investment adviser to the Fund is Cloud, Neff & Associates, Inc. (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 that
series with each other share of that series and is entitled to such dividends
and distributions out of income belonging to 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 and will been titled to receive as a class
a distribution out of the assets, net of the liabilities, belonging to that
series. Expenses attributable to any series are borne by that series. 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.
Prior to the public offering of the Fund, AmeriPrime Financial Securities,
Inc., 1793 Kingswood Drive, Suite 200, Southlake, Texas 76092, purchased all of
the outstanding shares of the Fund and may be deemed to control the Fund. As the
controlling shareholder, AmeriPrime Financial Securities, Inc. 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. After the public offering commences, it is
anticipated that AmeriPrime Financial Securities, Inc. will no longer control
the Fund.
For information concerning the purchase and redemption of shares of the
Fund, see "How to Buy Shares" and "How to Redeem Shares" in the Fund's
Prospectus. For a description of the methods used to determine the share price
and value of each Fund's assets, see "Determination of Net Asset Value" in the
Fund's Prospectus and this Statement of Additional Information.
<PAGE>
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 they may use.
A. Equity Securities. The Fund may invest in equity securities,
which include common stock, preferred stock, rights and warrants to subscribe to
or purchase such securities, and convertible securities consisting of debt
securities or preferred stock that may be converted into common stock or that
carry the right to purchase common stock. Common stocks, the most familiar type,
represent an equity (ownership) interest in a corporation.
Warrants are instruments that entitle the holder to buy underlying equity
securities at a specific price for a specific period of time. A warrant tends to
be more volatile than its underlying securities and ceases to have value if it
is not exercised prior to its expiration date. In addition, changes in the value
of a warrant do not necessarily correspond to changes in the value of its
underlying securities.
The Fund may invest in foreign companies by purchasing American Depository
Receipts ("ADRs") and index products like World Equity Benchmark Shares
("WEBS"). An ADR is a U.S. dollar denominated certificate that evidences
ownership of shares of a foreign company. They are alternatives to the direct
purchase of the underlying foreign stock. WEBS represent a broad portfolio of
publicly traded stocks in a selected country. Each WEBS Index Series seeks to
generate investment results that generally correspond to the market yield
performance of a given Morgan Stanley Capital International ("MSCI") index. The
Fund will not invest in foreign companies located in undeveloped or emerging
markets.
To the extent the Fund invests in ADRs or foreign index products, the Fund
could be subject to greater risks because the Fund's performance may depend on
issues other than the performance of a particular company. Changes in foreign
economies and political climates are more likely to affect the Fund than a
mutual fund that invests exclusively in U.S. companies. The value of foreign
securities is also affected by the value of the local currency relative to the
U.S. dollar. There may also be less government supervision of foreign markets,
resulting in non-uniform accounting practices and less publicly available
information.
Preferred stock has a preference in liquidation (and, generally dividends)
over common stock but is subordinated in liquidation to debt. As a general rule
the market value of preferred stocks with fixed dividend rates and no conversion
rights varies inversely with interest rates and perceived credit risk, with the
price determined by the dividend rate. Some preferred stocks are convertible
into other securities, (for example, common stock) at a fixed price and ratio or
upon the occurrence of certain events. The market price of convertible preferred
stocks generally reflects an element of conversion value. Because many preferred
stocks lack a fixed maturity date, these securities generally fluctuate
substantially in value when interest rates change; such fluctuations often
exceed those of long-term bonds of the same issuer. Some preferred stocks pay an
adjustable dividend that may be based on an index, formula, auction procedure or
other dividend rate reset mechanism. In the absence of credit deterioration,
adjustable rate preferred stocks tend to have more stable market values than
fixed rate preferred stocks. All preferred stocks are also subject to the same
types of credit risks of the issuer as corporate bonds. In addition, because
preferred stock is junior to debt securities and other obligations of an issuer,
deterioration in the credit rating of the issuer will cause greater changes in
the value of a preferred stock than in a more senior debt security with similar
yield characteristics. The Adviser expects that generally the preferred stocks
in which the Fund invests will be rated at least BBB by S&P or Baa by Moody's
or, if unrated, of comparable quality in the opinion of the Adviser.
Equity securities also include SPDRs (known as "Spiders"). These are
Standard & Poor's Depositary Receipts based on the S&P 500 or S&P 400 Composite
Stock Price Index or the NASDAQ 100 Price Index (NDX). The SPDR Trust is a unit
investment trust that holds shares of all the companies in the S&P 500, 400, or
NDX and closely tracks the price performance and dividend yield of the
applicable Index. SPDRs trade on the American Stock Exchange under the ticker
symbol "SPY", "MDY", and "QQQ."
B. 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.
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 have 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 rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission 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 nonpublicly 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 invest no more than 25% 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 Restrictions"
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. Options. The Fund will not purchase or sell puts, calls, options or
straddles, except as described in the Fund's Prospectus or Statement of
Additional Information.
5. 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.
6. Short Sales. The Fund will not effect short sales of securities except
as described in the Fund's Prospectus or Statement of Additional Information.
THE INVESTMENT ADVISER
The Fund's investment adviser is Cloud, Neff & Associates, Inc., 5314 South
Yale, Suite 606, Tulsa, OK 74135. Richard R. Cloud and David L. Neff may each be
deemed to control the Adviser due to their respective share of the ownership of
the Adviser.
Under the terms of the management agreement (the "Agreement"), the adviser
manages the Fund's investments subject to approval of the Board of Trustees. As
compensation for its management services, the Fund is obligated to pay the
Adviser a fee computed and accrued daily and paid monthly at an annual rate of
2.0% of the average daily net assets of the Fund.
The Adviser retains the right to use the name "Cloud, Neff" 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 "Cloud, Neff"
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 its shareholders. Banks 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 bank services will be lower than to those shareholders who do
not. The Fund may from time to time purchase securities issued by banks which
provide such services; however, in selecting investments for the Fund, no
preference will be shown for such securities.
<PAGE>
TRUSTEES AND OFFICERS
The Board of Trustees supervises the business activities of the Trust. The
names of the Trustees and executive officers of the Trust are shown below. Each
Trustee who is an "interested person" of the Trust, as defined in the Investment
Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
Name, Age and Address Position Principal Occupation During Past 5 Years
--------------------------------------------------------------------------------------
<S> <C> <C>
Kenneth D. Trumpfheller President, President, Treasurer , and Secretary of AmeriPrime
1793 Kingswood Drive Secretary, Financial Services, Inc., the Fund's administrator, and
Suite 200 Treasurer, AmeriPrime Financial Securities, Inc., the Fund's
Southlake, TX 76092 and Trustee distributor, since 1994. President, Secretary, Treasurer and
Trustee of AmeriPrime Funds and AmeriPrime Insurance
Trust. Prior to December, 1994 a senior client executive
Year of Birth: 1958 with SEI Financial Services.
-------------------------------------------------------------
--------------------------------------------------------------------------------------
Mark W. Muller Trustee Account Manager for Clarion Technologies, a manufacturer
175 Westwood Drive of automotive, heavy truck, and consumer goods, from 1996
Suite 300 to present. From 1986 to 1996, an engineer for Sicor, a
Southlake, TX 76092 telecommunication hardware company.
Year of Birth: 1964
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Richard J. Wright, Jr. Trustee Various positions with Texas Instruments, a technology
8505 Forest Lane company, since 1995, including the following : Program
MS 8672 Manager for Semi-Conductor Business Opportunity
Dallas, TX 75243 Management System, 1998 to present; Development Manager
for web-based interface, 1999 to present; Systems Manager for
Semi-Conductor Business Opportunity Management System,
1997 to 1998; Development Manager of Acquisition Manager,
1996-1997; Operations Manager for Procurement Systems,
Year of Birth: 1962 1994-1997.
--------------------------------------------------------------------------------------
</TABLE>
The following table estimates the Trustees' compensation for the first
full fiscal year. Trustee fees are Trust expenses and each series of the Trust
pays a portion of the Trustee fees.
=================================================================
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM TRUST (THE TRUST
NAME FROM TRUST IS
NOT IN A FUND COMPLEX)
-----------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
-----------------------------------------------------------------
Mark W. Muller $6,000 $6,000
-----------------------------------------------------------------
Richard J. Wright $6,000 $6,000
=================================================================
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust, 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. Consistent with
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc., and subject to its obligation of seeking best qualitative execution, the
Adviser may give consideration to sales of shares of the Trust as a factor in
the selection of brokers and dealers to execute portfolio transactions.
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,
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.
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 Advisor's clients seek to purchase or
sell the same security at or about the same time, the Advisor 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.
<PAGE>
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is 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 open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Determination of Net
Asset Value" in the Prospectus.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Fund's adviser's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, when the Fund's adviser determines
the last bid price does not accurately reflect the current value or when
restricted securities are being valued, such securities are valued as determined
in good faith by the Fund's adviser, subject to review of the Board of Trustees
of the Trust.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Fund's adviser believes such prices accurately reflect the fair market value of
such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Fund's adviser, 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 has
determined will represent fair value.
INVESTMENT PERFORMANCE
The Fund may periodically advertise "average annual total return."
"Average annual total return," as defined by the Securities and Exchange
Commission, is computed by finding the average annual compounded rates of return
for the period indicated that would equate the initial amount invested to the
ending redeemable value, according to the following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the applicable period
of the hypothetical $1,000 investment made at the beginning
of the applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period. If the Fund has been in existence
less than one, five or ten years, the time period since the date of the initial
public offering of shares will be substituted for the periods stated.
The Fund may also advertise performance information (a "non-standardized
quotation") which is calculated differently from average annual total return. A
non-standardized quotation of total return may be a cumulative return which
measures the percentage change in the value of an account between the beginning
and end of a period, assuming no activity in the account other than reinvestment
of dividends and capital gains distributions. A non-standardized quotation may
also be an average annual compounded rate of return over a specified period,
which may be a period different from those specified for average annual total
return. In addition, a non-standardized quotation may be an indication of the
value of a $10,000 investment (made on the date of the initial public offering
of the Fund's shares) as of the end of a specified period. These
non-standardized quotations do not include the effect of the applicable sales
load which, if included, would reduce the quoted performance. A non-standardized
quotation of total return will always be accompanied by the Fund's average
annual total return as described above.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
that Fund. These factors and possible differences in the methods and time
periods used in calculating non-standardized investment performance should be
considered when comparing the Fund's performance to those of other investment
companies or investment vehicles. The risks associated with the Fund's
investment objective, policies and techniques should also be considered. At any
time in the future, investment performance may be higher or lower than past
performance, and there can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. These may
include the Standard & Poor's 500 Stock Index, the NASDAQ Composite Index or the
Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other groups
of mutual funds tracked by any widely used independent research firm which ranks
mutual funds by overall performance, investment objectives and assets, such as
Lipper Analytical Services, Inc. or Morningstar, Inc. The objectives, policies,
limitations and expenses of other mutual funds in a group may not be the same as
those of the Fund. Performance rankings and ratings reported periodically in
national financial publications such as Barron's and Fortune also may be used.
CUSTODIAN
Firstar Bank, N.A., 425 Walnut Street M.L 6118, 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.
TRANSFER AGENT
Unified Fund Services, Inc. ("Unified"), 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Fund's transfer agent and, in such
capacity, maintains the records of each shareholder's account, 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. For
its services as transfer agent, Unified receives a monthly fee from the Adviser
of $1.20 per shareholder (subject to a minimum monthly fee of $900). In
addition, Unified 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, Unified receives an annual fee
from the Adviser equal to 0.0275% of the Fund's assets up to $100 million,
0.0250% of each Fund's assets from $100 million to $300 million and 0.020% of
each Fund's assets over $300 million (subject to various monthly minimum fees,
the maximum being $2,100 per month for assets of $20 to $100 million).
ACCOUNTANTS
The firm of McCurdy & Associates CPA's, Inc., 27955 Clemens Road,
Westlake, Ohio 44145, has been selected as independent public accountants for
the Fund for the first fiscal year. McCurdy & Associates performs an annual
audit of the Fund's financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Fund. Kenneth D. Trumpfheller, a Trustee and officer of the Trust, is an
affiliate of the Distributor. The Distributor is obligated to sell the shares of
the Fund on a best efforts basis only against purchase orders for the shares.
Shares of the Fund are offered to the public on a continuous basis.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the "Administrator") to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment, personnel and
facilities. The Administrator receives a monthly fee from the Adviser equal to
an annual average rate of 0.10% of the Fund's average daily net assets up to
fifty million dollars, 0.075% of the Fund's average daily net assets from fifty
to one hundred million dollars and 0.050% of the Fund's average daily net assets
over one hundred million dollars. The Administrator, the Distributor, and
Unified (the Fund's transfer agent) are controlled by Unified Financial
Services, Inc.
