UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21422
Trust for Advised Portfolios
(Exact name of registrant as specified in charter)
(Exact name of registrant as specified in charter)
615 East Michigan Street
Milwaukee, Wisconsin 53202
(Address of principal executive offices) (Zip code)
(Address of principal executive offices) (Zip code)
Christopher E. Kashmerick
Trust for Advised Portfolios
2020 East Financial Way, Suite 100
Glendora, CA 91741
(Name and address of agent for service)
(Name and address of agent for service)
(626) 914-7385
Registrant's telephone number, including area code
Date of fiscal year end: October 31
Date of reporting period: April 30, 2022
Item 1. Reports to Stockholders.
(a) |
Soundwatch Hedged Equity Fund
Institutional Class (BHHEX)
Semi-Annual Report to Shareholders
April 30, 2022
Table of Contents
Expense Example | 1 |
Allocation of Portfolio Holdings | 2 |
Schedule of Investments | 3 |
Statement of Assets and Liabilities | 4 |
Statement of Operations | 5 |
Statement of Changes in Net Assets | 6 |
Financial Highlights | 7 |
Notes to Financial Statements | 8 |
Additional Information | 15 |
Privacy Notice | 16 |
Directory of Fund’s Service Providers | Back Cover |
Soundwatch Hedged Equity Fund
Expense Example
April 30, 2022 (Unaudited)
As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs; and (2) ongoing costs, including management fees, and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from November 1, 2021 to April 30, 2022 (the “period”).
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 equals 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during the period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line of the table is useful in comparing the ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs could have been higher.
Expenses Paid During the Period
Beginning Account Value | Ending Account Value | Expenses Paid During the Period(1) | ||||||||||
Institutional Class | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 914.70 | $ | 3.37 | ||||||
Hypothetical 5% Return | 1,000.00 | 1,021.27 | 3.56 |
(1) | Expenses are equal to the Fund’s annualized expense ratio of 0.71%, multiplied by the average account value over the period, multiplied by 181/365. The expense ratios reflect an expense waiver. Assumes all dividends and distributions were reinvested. |
1
Soundwatch Hedged Equity Fund | |
Allocation of Portfolio Holdings | |
April 30, 2022 (Unaudited) | |
(Calculated as a percentage of Total Absolute Market Value) |
2
Soundwatch Hedged Equity Fund | ||||||||||||
SCHEDULE OF INVESTMENTS | ||||||||||||
April 30, 2022 (Unaudited) | ||||||||||||
Shares | Value | |||||||||||
EXCHANGE TRADED FUND ― 91.5% (1) | ||||||||||||
iShares Core S&P 500 ETF (2) | 220,000 | $ | 90,983,200 | |||||||||
TOTAL EXCHANGE TRADED FUND (Cost $52,548,405) | $ | 90,983,200 | ||||||||||
PURCHASED OPTIONS ― 7.4% (3) | Contracts | Notional ($) | ||||||||||
Call Options ― 0.1% | ||||||||||||
S&P 500 Index at $4,525, Expires December 30, 2022 | 11 | 4,545,123 | 162,635 | |||||||||
Total Call Options Purchased (Premiums paid $405,735) | 162,635 | |||||||||||
Put Options ― 7.3% | ||||||||||||
S&P 500 Index at $4,390, Expires June 30, 2022 | 231 | 95,447,583 | 7,238,385 | |||||||||
Total Put Options Purchased (Premiums paid $2,662,682) | 7,238,385 | |||||||||||
TOTAL PURCHASED OPTIONS (Premiums paid $3,068,417) | $ | 7,401,020 | ||||||||||
SHORT-TERM INVESTMENT ― 3.6% | Shares | |||||||||||
First American Money Market Fund - Government Obligations, X Class, 0.22% (4) | 3,581,352 | 3,581,352 | ||||||||||
TOTAL SHORT-TERM INVESTMENT (Cost $3,581,352) | $ | 3,581,352 | ||||||||||
TOTAL INVESTMENTS IN SECURITIES, AT VALUE ― 102.5% (Cost $59,198,174) | $ | 101,965,572 | ||||||||||
Liabilities in Excess of Other Assets ― (2.5)% | (2,524,011 | ) | ||||||||||
TOTAL NET ASSETS ― 100.0% | $ | 99,441,561 | ||||||||||
WRITTEN OPTIONS ― (3.8)% (3) | Amount | Value | ||||||||||
Call Options ― (0.0)% | ||||||||||||
S&P 500 Index at $4,855, Expires June 22, 2022 | (231 | ) | (95,447,583 | ) | (36,383 | ) | ||||||
Total Call Options Written (Premiums received $948,465) | (36,383 | ) | ||||||||||
Put Options ― (3.8)% | ||||||||||||
S&P 500 Index at $4,525, Expires December 30, 2022 | (11 | ) | (4,545,123 | ) | (558,030 | ) | ||||||
S&P 500 Index at $4,020, Expires June 30, 2022 | (231 | ) | (95,447,583 | ) | (3,194,730 | ) | ||||||
Total Put Options Written (Premiums received $1,647,540) | (3,752,760 | ) | ||||||||||
TOTAL WRITTEN OPTIONS (Premiums received $2,596,005) | $ | (3,789,143 | ) |
Percentages are stated as a percent net of assets. | ||||||||
(1) | See Note 6. | |||||||
(2) | A portion of this security is pledged as collateral. | |||||||
(3) | Non-income producing securities. | |||||||
(4) | The rate is the annualized seven-day yield at period end. |
The accompanying notes are an integral part of these financial statements.
3
Soundwatch Hedged Equity Fund | ||||
STATEMENT OF ASSETS AND LIABILITIES | ||||
April 30, 2022 (Unaudited) | ||||
Assets: | ||||
Investments in securities at value (cost $59,198,174) | $ | 101,965,572 | ||
Deposits at broker for options trading | 1,206,356 | |||
Receivables: | ||||
Investment securities sold | 160,572 | |||
Interest receivable | 570 | |||
Prepaid expenses | 11,897 | |||
Total assets | 103,344,967 | |||
Liabilities: | ||||
Written options, at value (premiums received $2,596,005) | 3,789,143 | |||
Payables: | ||||
Due to Investment Adviser | 27,866 | |||
Interest payable | 2,551 | |||
Trustee fees payable | 325 | |||
Accrued expenses and other liabilities | 83,521 | |||
Total liabilities | 3,903,406 | |||
Net Assets | $ | 99,441,561 | ||
Components of Net Assets: | ||||
Paid-in capital | $ | 75,612,299 | ||
Total distributable earnings | 23,829,262 | |||
Net Assets | $ | 99,441,561 | ||
Institutional Class: | ||||
Net Assets | $ | 99,441,561 | ||
Issued and Outstanding | 4,597,576 | |||
Net Asset Value, Redemption Price and Offering Price Per Share | $ | 21.63 |
The accompanying notes are an integral part of these financial statements.
4
Soundwatch Hedged Equity Fund | ||||
Statement of Operations | ||||
For the Six Months Ended April 30, 2022 (Unaudited) | ||||
Investment Income: | ||||
Dividend income | $ | 656,691 | ||
Interest income | 1,061 | |||
Total investment income | 657,752 | |||
Expenses: | ||||
Advisory fees (Note 3) | 343,183 | |||
Administration and fund accounting fees (Note 3) | 51,799 | |||
Shareholder servicing fee | 47,695 | |||
Interest expense (Note 2 & 7) | 24,171 | |||
Transfer agent expenses (Note 3) | 22,104 | |||
Legal fees | 11,659 | |||
Audit fees | 8,679 | |||
Compliance fees (Note 3) | 8,024 | |||
Trustee fees (Note 3) | 7,723 | |||
Registration fees | 6,418 | |||
Custody fees (Note 3) | 5,981 | |||
Shareholder reporting fees | 4,200 | |||
Insurance fees | 1,412 | |||
Miscellaneous expenses | 2,591 | |||
Total expenses | 545,639 | |||
Expenses waived and reimbursed by the Adviser (Note 3) | (178,286 | ) | ||
Net expenses | 367,353 | |||
Net investment income | 290,399 | |||
Realized and Unrealized Loss | ||||
Net realized loss on: | ||||
Investments | (3,486,048 | ) | ||
Written Options | (100,220 | ) | ||
Net realized loss: | (3,586,268 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (5,348,283 | ) | ||
Written Options | (550,029 | ) | ||
Net change in unrealized appreciation (depreciation) | (5,898,312 | ) | ||
Net realized and unrealized loss on investments and written options | (9,484,580 | ) | ||
Net decrease in net assets resulting from operations | $ | (9,194,181 | ) |
The accompanying notes are an integral part of these financial statements.
5
Soundwatch Hedged Equity Fund | ||||||||
Statements of Changes in Net Assets | ||||||||
For the Six Months Ended April 30, 2022 (Unaudited) | For the Year Ended October 31, 2021 | |||||||
Increase (Decrease) in Net Assets from: | ||||||||
Operations: | ||||||||
Net investment income | $ | 290,399 | $ | 621,058 | ||||
Net realized loss on investments and written options | (3,586,268 | ) | (4,638,155 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments and written options | (5,898,312 | ) | 25,459,825 | |||||
Net increase (decrease) in net assets resulting from operations | (9,194,181 | ) | 21,442,728 | |||||
Distributions to Shareholders: | (561,873 | ) | (851,115 | ) | ||||
Capital Transactions: | ||||||||
Net proceeds from shares sold | 5,551,533 | 9,298,186 | ||||||
Reinvestment of distributions | 545,758 | 834,709 | ||||||
Cost of shares repurchased | (2,549,144 | ) | (9,466,018 | ) | ||||
Net increase in net assets from capital transactions | 3,548,147 | 666,877 | ||||||
Total Increase (Decrease) in Net Assets | (6,207,907 | ) | 21,258,490 | |||||
Net Assets: | ||||||||
Beginning of period | 105,649,468 | 84,390,978 | ||||||
End of period | $ | 99,441,561 | $ | 105,649,468 | ||||
Capital Share Transactions: | ||||||||
Shares sold | 240,087 | 420,321 | ||||||
Shares reinvested | 22,646 | 40,817 | ||||||
Shares repurchased | (108,884 | ) | (427,791 | ) | ||||
Net increase in shares outstanding | 153,849 | 33,347 |
The accompanying notes are an integral part of these financial statements.
6
Soundwatch Hedged Equity Fund | |||||||||||||||||||
Financial Highlights | |||||||||||||||||||
Institutional Class | |||||||||||||||||||
Per Share Data for a Share Outstanding Throughout Each Period Presented. | |||||||||||||||||||
For the Six Months Ended April 30, 2022 (Unaudited) | For the Year Ended October 31, 2021 | For the Year Ended October 31, 2020 | For the Year Ended October 31, 2019 | For the Year Ended October 31, 2018 | Period from November 30, 2016* to October 31, 2017 | ||||||||||||||
Net Asset Value, Beginning of Period | $ | 23.77 | | $ | 19.13 | $ | 18.17 | $ | 17.33 | $ | 17.21 | $ | 15.00 | ||||||
Income from Investment Operations: | |||||||||||||||||||
Net investment income(1) | 0.06 | 0.14 | 0.23 | 0.24 | 0.13 | 0.14 | |||||||||||||
Net realized and unrealized gain (loss) on investments | (2.07) | 4.69 | 1.00 | 0.78 | 0.10 | (2) | 2.15 | ||||||||||||
Total income from investment operations | (2.01) | 4.83 | 1.23 | 1.02 | 0.23 | 2.29 | |||||||||||||
Less Distributions: | |||||||||||||||||||
From net investment income | (0.13) | (0.19) | (0.27) | (0.18) | (0.11) | (0.08) | |||||||||||||
Total distributions | (0.13) | (0.19) | (0.27) | (0.18) | (0.11) | (0.08) | |||||||||||||
Net Asset Value, End of Period | $ | 21.63 | $ | 23.77 | $ | 19.13 | $ | 18.17 | $ | 17.33 | $ | 17.21 | |||||||
Total Return(7) | -8.53% | (3) | 25.44% | 6.83% | 5.94% | 1.31% | 15.33% | (3) | |||||||||||
SUPPLEMENTAL DATA AND RATIOS: | |||||||||||||||||||
Net assets, end of period (in thousands) | $99,442 | $105,649 | $84,391 | $93,905 | $105,986 | $78,486 | |||||||||||||
Ratio of expenses to average net assets(5) | |||||||||||||||||||
Before fees waived / reimbursed by the Adviser | 1.05% | (4) | 1.06% | 1.09% | 1.06% | 1.19% | 1.63% | (4) | |||||||||||
After fees waived / reimbursed by the Adviser | 0.71% | (4) | 0.72% | 0.71% | 0.75% | 0.97% | 1.06% | (4) | |||||||||||
Ratio of net investment income to average net assets(6) | |||||||||||||||||||
After fees waived / reimbursed by the Adviser | 0.56% | (4) | 0.64% | 1.24% | 1.36% | 0.76% | 0.93% | (4) | |||||||||||
Portfolio Turnover Rate | 15% | (3) | 2% | 13% | 23% | 8% | 3% | (3) |
* | Inception date | ||||||||||||
(1) | Computed using the average shares method. | ||||||||||||
(2) | The net realized and unrealized gain on investments per share does not accord with the net of the amounts reported in the statement of operations due to the timing of purchases and redemptions of the Fund shares during the year. | ||||||||||||
(3) | Not annualized. | ||||||||||||
(4) | Annualized. | ||||||||||||
(5) | The ratio of expenses to average net assets includes tax, short dividend and/or interest expense. For the periods ended April 30, 2022, October 31, 2021, October 31, 2020, October 31, 2019, October 31, 2018 and October 31, 2017, the ratio of expenses to average net assets excluding tax, short dividend and/or interest expense before fees waived by the Adviser was 1.00%, 1.00%, 1.04%, 1.05%, 1.17% and 1.52%, respectively. Excluding tax, short dividend and/or interest expense, the ratio of expenses to average net assets, after fees waived by the Adviser, was 0.66%, 0.66%, 0.66%, 0.74%, 0.95% and 0.95%, respectively. See Note 3. | ||||||||||||
(6) | The ratio of net investment income to average net assets includes tax, short dividend and/or interest expense. For the periods ended April 30, 2022, October 31, 2021, October 31, 2020, October 31, 2019, October 31, 2018 and October 31, 2017, the ratio of net investment income to average net assets excluding tax, short dividend and/or interest expense after fees waived by the Adviser was 0.60%, 0.70%, 1.29%, 1.37%, 0.78% and 1.04%, respectively. | ||||||||||||
(7) | Performance figures, exclusive of sales charges, may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. |
The accompanying notes are an integral part of these financial statements.
7
Soundwatch Hedged Equity Fund
Notes to Financial Statements
April 30, 2022 (Unaudited)
NOTE 1 – Organization
The Soundwatch Hedged Equity Fund, formerly Soundwatch Core Hedged Equity Fund, (the “Fund”) is a diversified series of Trust for Advised Portfolios (the “Trust”). The Trust was organized on August 28, 2003, as a Delaware Statutory Trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”) as an open-end investment management company. Soundwatch Capital, LLC (the “Adviser”) serves as the investment manager to the Fund. The investment objective of the Fund is to provide long-term capital appreciation. The inception date of the Fund was November 30, 2016.
NOTE 2 – Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for investment companies. The Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies in the Financial Accounting Standards Board Accounting Standards Codification Topic 946. The presentation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the period reported. Actual results may differ from those estimates.
(a) Securities Valuation –Securities traded on a national securities exchange are valued at the last reported sales price on the exchange on which the security is principally traded. Securities that are traded on more than one exchange are valued on the exchange determined by the Adviser to be the primary market. The Adviser anticipates that the Fund's portfolio holdings will be fair valued only if market quotations for those holdings are considered unreliable or are unavailable.
Securities primarily traded in the NASDAQ Global Market® for which market quotations are readily available shall be valued using the NASDAQ® Official Closing Price (“NOCP”). If the NOCP is not available, such securities shall be valued at the last sale price on the day of valuation, or if there has been no sale on such day, at the mean between the bid and asked prices. Over-the-counter (“OTC”) securities which are not traded in the NASDAQ Global Market® shall be valued at the most recent sales price. Securities and assets for which market quotations are not readily available (including restricted securities which are subject to limitations as to their sale) are valued at fair value as determined in good faith under procedures approved by or under the direction of the Board.
Exchange traded options are valued at the composite mean price, which calculates the mean of the highest bid price and lowest ask price across the exchanges where the option is principally traded. On the last trading day prior to expiration, expiring options may be priced at intrinsic value. For options where market quotations are not readily available, fair value shall be determined by the Adviser with oversight by the Trust’s Valuation Committee.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized into three broad levels and described below:
Level 1 - quoted prices in active markets for identical securities. An active market for the security is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value.
Level 2 - observable inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates, and similar data.
8
Soundwatch Hedged Equity Fund
Notes to Financial Statements (Continued)
April 30, 2022 (Unaudited)
Level 3 - significant unobservable inputs, including the Fund’s own assumptions in determining the fair value of investments.
The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to fair value the Fund’s investments in each category investment type as of April 30, 2022:
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets | ||||||||||||||||
Exchange Traded Fund | $ | 90,983,200 | $ | - | $ | - | $ | 90,983,200 | ||||||||
Purchased Options | 7,401,020 | - | - | 7,401,020 | ||||||||||||
Short-Term Investment | 3,581,352 | - | - | 3,581,352 | ||||||||||||
Total | $ | 101,965,572 | $ | - | $ | - | $ | 101,965,572 | ||||||||
Liabilities | ||||||||||||||||
Written Options | $ | (3,789,143 | ) | $ | - | $ | - | $ | (3,789,143 | ) | ||||||
Total | $ | (3,789,143 | ) | $ | - | $ | - | $ | (3,789,143 | ) |
See the Schedule of Investments for further detail of investment classifications.
(b) Derivatives – The Fund invests in certain derivatives, as detailed below, to meet its investment objectives.
The Fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Derivatives are subject to a number of risks, such as liquidity risk, interest rate risk, market risk, credit risk and management risk. They also involve the risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. The Fund could lose more than the principal amount invested by investing in a derivative instrument. Also, suitable derivative transactions may not be available in all circumstances and there can be no assurance that the Fund will engage in these transactions to reduce exposure to other risks when that would be beneficial.
The Fund may also utilize certain financial instruments and investment techniques for risk management or hedging purposes. There is no assurance that such risk management and hedging strategies will be successful, as such success will depend on, among other factors, the Adviser’s ability to predict the future correlation, if any, between the performance of the instruments utilized for hedging purposes and the performance of the investments being hedged.
The following provides more information on specific types of derivatives and activity in the Fund. The use of derivative instruments by the Fund for the period ended April 30, 2022 was related to the use of purchased and written options. The Fund systematically writes (sells) equity index and/or ETF call options, covered calls and option spreads to generate additional income. A portion of the proceeds is used to systematically purchase a series of protective equity index and/or ETF put options or put spreads to reduce the negative impact of stock market declines on long-term performance.
As the seller of an index call option, the Fund receives cash (the “premium”) from the purchaser. The purchaser of an index call option has the right to any appreciation in the value of the index over a fixed price (the “exercise price”) on a certain date in the future (the “expiration date”). If the purchaser does not exercise the option, the Fund retains the premium. If the purchaser exercises the option, the Fund pays the purchaser the difference between the value of the index and the exercise price of the option. The premium, the exercise price and the value of the index determine the gain or loss realized by the Fund as the seller of the index call option.
9
Soundwatch Hedged Equity Fund
Notes to Financial Statements (Continued)
April 30, 2022 (Unaudited)
The Fund also buys index and/or ETF put options in an attempt to protect the Fund from a significant market decline that may occur over a short period of time. The value of an index and/or ETF put option generally increases as stock prices (and the value of the index) decrease and decreases as those stocks (and the index) increase. A put spread is an option spread strategy that is created when equal number of put options are bought and sold simultaneously. Under certain market conditions, the selling of call options, including covered call options, or option spreads and purchasing of protective put options or put spreads may limit the upside returns of the Fund.
Soundwatch Hedged Equity Fund
Statement of Assets and Liabilities Location | |
Assets | |
Risk Exposure Category | Investments (1) |
Equity | $ 7,401,020 |
Total | $ 7,401,020 |
Liabilities | |
Risk Exposure Category | Written Options |
Equity | $ (3,789,143) |
Total | $ (3,789,143) |
(1) | Includes purchased options |
The following table sets forth the Fund’s realized and unrealized gain (loss), as reflected in the Consolidated Statement of Operations, by primary risk exposure and by type of derivative contract for the period ended April 30, 2022:
Amount of Realized Gain (Loss) on Derivatives
Risk Exposure Category | Investments(1) | Written Options |
Equity | $ (3,522,047) | $ (100,220) |
Total | $ (3,522,047) | $ (100,220) |
Change in Unrealized Appreciation (Depreciation) on Derivatives
Risk Exposure Category | Investments(1) | Written Options |
Equity | $ 5,257,757 | $ (550,029) |
Total | $ 5,257,757 | $ (550,029) |
(1) | Includes purchased options |
The Fund had outstanding purchased and written option contracts as listed on the Schedule of Investments as of April 30, 2022. For the period ended April 30, 2022, the month-end average number of purchased and written option contracts for the Fund was 294 and (446), respectively.
10
Soundwatch Hedged Equity Fund
Notes to Financial Statements (Continued)
April 30, 2022 (Unaudited)
(c) Federal Income Taxes - The Fund has elected to be taxed as a Regulated Investment Companies (“RIC”) under the U.S. Internal Revenue Code of 1986, as amended, and intends to maintain this qualification and to distribute substantially all of the net taxable income to its shareholders. Therefore, no provision is made for federal income taxes. Due to the timing of dividend distributions and the differences in accounting for income and realized gains and losses for financial statement and federal income tax purpose, the fiscal year in which amounts are distributed may differ from the year in which the income and realized gains and losses are recorded by the Fund.
As of and during the period ended April 30, 2022, the Fund did not have a liability for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year, the Fund did not incur any interest or tax penalties. The Fund’s federal and state income tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
(d) Distributions to Shareholders –Distributions from net investment income and distributions of net realized gains, if any, are declared at least annually. Distributions to shareholders of the Fund are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.
(e) Indemnifications – In the normal course of business, the Fund enters into contracts that contain a variety of representations, which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.
(f) Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(g) Security Transactions and Investment Income – The Fund records security transactions based on trade date. Realized gains and losses on sales of securities are reported based on identified cost of securities delivered. Dividend income and expense are recognized on the ex-dividend date, and interest income and expense are recognized on an accrual basis.
(h) Options Trading – The Fund maintains an account with Interactive Brokers LLC (“IB”) for options trading. The cash balance maintained at IB is reported as Deposits at broker for option trading on the Statement of Assets and Liabilities. Securities pledged as collateral for this account are denoted on the Schedule of Investments.
The Fund may earn or pay interest on this account based on the cash balance and value of open option contracts. The Fund earns interest income if the cash balance and value of purchased options exceeds the value of written options and pays interest expense if the value of written options exceeds the cash balance and value of purchased options. For the period ended April 30, 2022, the Fund paid interest expense totaling $24,171 as included on the Statement of Operations.
NOTE 3 – Investment Management Agreement and Other Transactions with Affiliates
The Trust has an agreement with the Adviser to furnish investment advisory services to the Fund. Effective under the terms of this agreement, the Fund pays the Adviser a monthly fee based on the average daily net assets at an annual rate of 0.66%. Prior to March 1, 2019, the annual rate paid was 0.85% of the average daily net assets.
The Adviser has contractually agreed to waive a portion or all of its management fees and pay Fund expenses (excluding taxes, leverage expense, brokerage commissions, acquired fund fees and expenses, interest expense and dividends paid on short sales or extraordinary expenses) in order to limit the Total Annual Fund Operating Expenses to 0.66% of average daily net assets of the Fund’s Institutional Class (the “Expense Cap”). The Expense Cap had previously been lowered from 0.95% to 0.90%, effective November 15, 2018; from 0.90% to 0.85%, effective December 15, 2018; and to the current rate of 0.66%, effective March 1, 2019.
11
Soundwatch Hedged Equity Fund
Notes to Financial Statements (Continued)
April 30, 2022 (Unaudited)
The Adviser is entitled to recoup the amounts provided for in the fee waiver and reimbursement agreement for a period of up to 36 months following the month in which the Adviser reduced its compensation and/or assumed expenses for the Fund, provided that the total operating expenses of the Fund, including the recoupment, do not exceed the lesser of the current expense limitation or the limitation at the time of the waiver.
At April 30, 2022, the amounts waived by the Adviser are as follows:
Year Waived / Reimbursed | Amounts Available for Recoupment | Expiration | |||
2019 | $ | 154,273 | October 31, 2022 | ||
2020 | 323,163 | October 31, 2023 | |||
2021 | 335,624 | October 31, 2024 | |||
2022 | 178,286 | April 30, 2025 | |||
$ | 991,346 |
U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”) serves as the administrator, fund accountant and transfer agent to the Fund. The officers of the Trust are employees of Fund Services. U.S. Bank, N.A. serves as the Fund’s custodian. Quasar Distributors, LLC (“Quasar”), serves as the Fund’s distributor and principal underwriter. For the period ended April 30, 2022, the Fund incurred the following expenses for administration & fund accounting, transfer agent, compliance and custody fees:
Administration & fund accounting | $ | 51,799 | ||
Transfer Agent | $ | 22,104 | ||
Compliance | $ | 8,024 | ||
Custody | $ | 5,981 |
At April 30, 2022, the Fund had payables for administration & fund accounting, transfer agent, compliance and custody fees in the following amounts:
Administration & fund accounting | $ | 25,304 | ||
Transfer Agent | $ | 11,040 | ||
Compliance | $ | 3,888 | ||
Custody | $ | 2,011 | ||
The above payable amounts are included in Accrued expenses and other liabilities in the Statement of Assets and Liabilities.
The Independent Trustees earned $7,723 for their services and reimbursement of travel expenses during the period ended April 30, 2022. The Fund pays no compensation to the Interested Trustee or officers of the Trust.
12
Soundwatch Hedged Equity Fund
Notes to Financial Statements (Continued)
April 30, 2022 (Unaudited)
NOTE 4 – Investment Transactions
Purchases and sales of long-term investment securities for the period ended April 30, 2022, were as follows:
Purchases………………………………………………………………………………………………… | $ | 14,912,978 | ||
Sales……………………………………………………………………………………………………… | $ | 15,949,261 |
NOTE 5 – Federal Income Tax Information
At October 31, 2021, the components of accumulated earnings (deficit) for income tax purposes were as follows:
Investments | Total | |||||||
Cost of Investments……………………………………….……… | $ | 60,097,743 | $ | 60,097,743 | ||||
Gross Unrealized Appreciation…………………………….…….. | 49,040,834 | 49,040,834 | ||||||
Gross Unrealized Depreciation………………………….……….. | (4,444 | ) | (4,444 | ) | ||||
Net Unrealized Appreciation (Depreciation) on Investments……. | 49,036,390 | 49,036,390 | ||||||
Undistributed ordinary income…………………………………... | 363,573 | 363,573 | ||||||
Undistributed long-term capital gains…………………................. | - | - | ||||||
Total distributable earnings………………………………………. | 363,573 | 363,573 | ||||||
Other accumulated gain (loss) …………………............................ | (15,814,647 | ) | (15,814,647 | ) | ||||
Total accumulated gain (loss) ……………………….................... | $ | 33,585,316 | $ | 33,585,316 |
The difference between book basis and tax basis unrealized appreciation/depreciation is attributable in part to the tax deferral of losses on wash sales and mark-to-markets.
At October 31, 2021, the Fund had capital loss carryforwards, which reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code, and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Internal Revenue Code, the character of such capital loss carryforwards is as follows:
Not Subject to Expiration
Short-Term | Long-Term | Total |
$ 9,090,668 | $ 6,723,979 | $ 15,814,647 |
The tax character of distributions paid during the periods ended April 30, 2022 and October 31, 2021 were as follows:
Period Ended April 30, 2022 | Year Ended October 31, 2021 | |||||||
Distributions Paid From: | ||||||||
Ordinary Income | $ | 561,873 | $ | 851,115 | ||||
Total Distributions Paid | $ | 561,873 | $ | 851,115 |
13
Soundwatch Hedged Equity Fund
Notes to Financial Statements (Continued)
April 30, 2022 (Unaudited)
NOTE 6 – Underlying Investments in Other Investment Companies
The Fund currently invests a portion of its assets in iShares Core S&P 500 ETF (“IVV”). The Fund may redeem its investment from IVV at any time if the Adviser determines that it is in the best interest of the Fund and its shareholders to do so. The performance of the Fund may be directly affected by the performance of IVV. The expense ratio of IVV is 0.03% of net assets as reflected in the most current prospectus. The financial statements of IVV, including its portfolio of investments, can be found at the Securities and Exchange Commission’s (SEC) website www.sec.gov and should be read in conjunction with the Fund’s financial statements. As of April 30, 2022, the percentage of the Fund’s net assets invested in IVV was 91.5%.
NOTE 7 – Line of Credit
The Fund has access to an $8 million secured line of credit through an agreement with U.S. Bank. The Fund may temporarily draw on the line of credit to satisfy redemption requests or settle investment transactions. Interest is charged to the Fund based on its borrowings at a rate per annum equal to the Prime Rate, to be paid monthly. Loan activity for the period ended April 30, 2022 was as follows:
Maximum available credit | $ | 8,000,000 | ||
Largest amount outstanding on an individual day | 1,324,000 | |||
Average daily loan outstanding – 1 day | 1,324,000 | |||
Interest expense | 120 | |||
Loan outstanding as of April 30, 2022 | - | |||
Average interest rate | 3.25 | % |
NOTE 8 – Control Ownership
The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates presumption of control of the fund under 2(a)(9) of the 1940 Act. As of October 31, 2021, Charles Schwab & Company, Inc. held, in aggregate for the benefit of others, 82% of the outstanding shares of the Fund.
NOTE 9 – Subsequent Events
In preparing these financial statements, the Fund has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were available to be issued. The Fund has determined that there were no subsequent events that would need to be disclosed in the Fund’s financial statements.
14
Soundwatch Hedged Equity Fund
Additional Information
April 30, 2022 (Unaudited)
Quarterly Portfolio Schedule
The Fund files its complete schedule of portfolio holdings for the first and third quarters of each fiscal year with the SEC as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available without charge by visiting the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington D.C. You may obtain information on the operation of the Public Reference Room by calling (800) SEC-0330.
Proxy Voting
You may obtain a description of the Fund’s proxy voting policy and voting records, without charge, upon request by contacting the Fund directly at (888) 244-4601 or on the EDGAR Database on the SEC’s website at www.sec.gov. The Fund files its proxy voting records annually as of June 30 with the SEC on Form N-PX. The Fund’s Form N-PX is available without charge by visiting the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington D.C. You may obtain information on the operation of the Public Reference Room by calling (800) SEC-0330.
15
Privacy Notice
The Fund collects non-public information about you from the following sources:
• Information we receive about you on applications or other forms;
• Information you give us orally; and/or
• Information about your transactions with us or others.
We do not disclose any non-public personal information about our customers or former customers without the customer’s authorization, except as permitted by law or in response to inquiries from governmental authorities. We may share information with affiliated and unaffiliated third parties with whom we have contracts for servicing the Fund. We will provide unaffiliated third parties with only the information necessary to carry out their assigned responsibilities. We maintain physical, electronic and procedural safeguards to guard your non-public personal information and require third parties to treat your personal information with the same high degree of confidentiality.
In the event that you hold shares of the Fund through a financial intermediary, including, but not limited to, a broker-dealer, bank, or trust company, the privacy policy of your financial intermediary would govern how your non-public personal information would be shared by those entities with unaffiliated third parties.
16
Investment Adviser
Soundwatch Capital, LLC
485 Madison Avenue, 7th Floor
New York, NY 10022
Distributor
Quasar Distributors, LLC
111 East Kilbourn Ave., Suite 2200
Milwaukee, Wisconsin 53202
Custodian
U.S. Bank National Association
Custody Operations
1555 North River Center Drive, Suite 302
Milwaukee, Wisconsin 53212
Transfer Agent, Fund Accountant and Fund Administrator
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
Independent Registered Public Accounting Firm
BBD, LLP
1835 Market Street, 3rd Floor
Philadelphia, PA 19103
Legal Counsel
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington, DC 20004
This report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.
(b) | Not applicable. |
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable to registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934).
Item 6. Investments.
Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 9. Purchases of Equity Securities by Closed‑End Management Investment Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s Board of Trustees.
Item 11. Controls and Procedures.
(a) | The Registrant’s President and Treasurer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d‑15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant’s service provider. |
(b) | There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies
Not applicable to open-end investment companies.
Item 13. Exhibits.
(a) | (1) Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Not applicable for semi-annual reports. |
(3) Any written solicitation to purchase securities under Rule 23c‑1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investment companies.
(4) Change in the registrant’s independent public accountant. There was no change in the registrant’s independent public accountant for the period covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Trust for Advised Portfolios
By /s/ Christopher E. Kashmerick
Christopher E. Kashmerick, President
Date 7/6/2022
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By /s/ Christopher E. Kashmerick
Christopher E. Kashmerick, President
Date 7/6/2022
By /s/ Russell B. Simon
Russell B. Simon, Treasurer
Date 7/6/2022