UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22208
Valued Advisers Trust
(Exact name of registrant as specified in charter)
Huntington Asset Services, Inc.
2960 N. Meridian Street,
Suite 300 Indianapolis, IN 46208
(Address of principal executive offices) (Zip code)
Capitol Services, Inc.
615 S. Dupont Hwy.
Dover, DE 19901
(Name and address of agent for service)
With a copy to:
John H. Lively, Esq.
The Law Offices of John H. Lively & Associates, Inc.
A member firm of The 1940 Act Law GroupTM
11300 Tomahawk Creek Parkway,
Suite 310
Leawood, KS 66221
Registrant’s telephone number, including area code: 317-917-7000
Date of fiscal year end: 5/31
Date of reporting period: 11/30/13
Item 1. Reports to Stockholders.
BFS Family of Funds
BFS Equity Fund
Semi-Annual Report
November 30, 2013
Fund Adviser:
Bradley, Foster & Sargent, Inc.
185 Asylum St.
City Place II
Hartford, CT 06103
Toll Free (855) 575-2430
Letter to Shareholders
Dear Fellow Shareholder:
Welcome to your first semi-annual report for the BFS Equity Fund (“Fund”). The inception of the Fund was November 8, 2013 so this report only covers the period from the date of inception through November 30, 2013 – 23 days. In this report, you will find commentary from the Bradley, Foster & Sargent portfolio managers who are managing the Fund – Keith LaRose, Lead Portfolio Manager and Co-Portfolio Managers, Tim Foster and Tom Sargent, our firm’s Chief Investment Officer. You will also find a listing of the portfolio holdings as of November 30, 2013, financial statements, and detailed information about the performance and the positioning of the BFS Equity Fund.
As mentioned above, the inception of the Fund took place in November 8, 2013 – approximately 4 1⁄2 years after the S&P 500 Index (“S&P 500”)1 bottomed at 666.79 on March 6, 2009. From the market bottom through November 8, 2013, the price of the S&P 500 climbed 165.6%. Although we were cautiously optimistic about the economy and U.S. stock market and the global economy at the inception of the Fund (and remain so), the Fund’s managers sought to construct the Fund’s initial portfolio with quality growth stocks at reasonable prices with two objectives in mind: to construct a portfolio which will weather stock market pullbacks or even a 20% + correction to the market, as the bull market nears the end of a 5 year run, but also to perform well if the bull market continues in 2014.
These two objectives align with the investment strategy of the Fund laid out in our Prospectus: to identify what we believe are quality companies, at reasonable prices, and to invest in these companies at favorable moments, which often happens after an event or change of circumstances has occurred. By adhering to this investment strategy over the long haul, we seek to enhance the performance of the Fund yet achieve this performance with a risk-managing approach which aims to provide a “margin of safety” – a phrase coined by the dean of financial analysis, Ben Graham.
We appreciate the trust you have placed in us to manage part or all of your assets and to help you achieve your financial goals. We encourage you to contact us via email through our website – www.bfsinvest.com – or by telephone at 860-527-8050 with any questions or concerns about the Fund that are not addressed in this report.
| Sincerely, |
| Robert H. Bradley |
| President and CEO |
| Bradley, Foster & Sargent, Inc |
1
| 1 | The S&P 500 Index is a widely recognized unmanaged index of equity prices and is representative of a broader market and range of securities than is found in the Fund’s portfolio. The Index returns do not reflect the deduction of expenses, which have been deducted from the Fund’s returns. The Index return assumes reinvestment of all distributions and does not reflect the deduction of taxes and fees. Individuals cannot invest directly in the Index, however, an individual can invest in exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index. |
2
Portfolio Managers’ Commentary
The BFS Equity Fund (the “Fund”) commenced portfolio operations on November 8, 2013 in the midst of a powerful market advance. At the time of the Fund’s launch, the S&P 500® Index (“S&P 500”) had showed a total return (including dividends reinvested) of 24.7% for the year-to-date period through November 7, 2013. Just days before our launch, on October, 29th, the S&P 500 had closed at an all-time high of 1771.91. At the same time, yields on U.S. Government bonds were climbing higher. In our opinion, a very buoyant equity market and expectations for less quantitative easing by the Federal Reserve Bank were positive signals associated with a process of “normalization”, which were likely to be a precursor to more sustainable organic economic growth. Reduced stresses in European credit markets provided further evidence that stabilization was spreading globally. Although the U.S. stock markets, as well as several foreign markets, were near or at historic highs at the time of the Fund’s launch, valuations remained attractive, in our view, given an expansionary backdrop, and we felt confident initiating positions in our favorite names.
For the 23 day period (November 8-30, 2013), which this report covers, we trailed our S&P 500 benchmark by 1.31%. Part of the reason for this underperformance was attributable to the cash reserves the Fund carried, as new money was being added to the Fund daily. Additionally, several sectors in which the Fund invested trailed our benchmark during this 23 day period. Nevertheless, we remain positive that our investment philosophy and approach will stand shareholders in good stead over the long term. We intend to invest our shareholders’ capital with long-term results in mind.
During this truncated period, the sector that outperformed the S&P 500 the most was technology, with the best performer in that sector being Apple. The two sectors which had the greatest underperformance against the S&P 500 were energy and consumer staples with energy having a negative absolute return. As of November 30th, the largest holdings, which can be seen in the nearby Schedule of Investments, illustrate the type of quality companies in which we invest –companies with great brands, global reach, strong balance sheets, and good cash flow. Our ownership of J.P. Morgan Chase reflects our confidence in U.S. economic expansion in 2014 and an improving Europe; the company’s capital levels are strong, legal entanglements are diminishing, and the bank is leveraged to growth and rising rates. Apple is compelling on a valuation basis, and in our view Apple’s current customers are sticky. Apple’s massive global opportunity to gain new customers remains robust. We believe that United Technologies is one of the best industrial companies in the world with revenues and earnings poised for faster growth. Danaher, in our opinion, is a high quality company by every measure, with nearly $8 billion in acquisition capacity going into 2014. We believe that Danaher will deploy this capital in its typically accretive fashion. Johnson and Johnson is experiencing a long awaited renaissance in its new drug pipeline, while operating problems that plagued its consumer segment appear to be in the rear view mirror. Common across our portfolio companies is balance sheet strength, industry leading market shares, great management teams, and solid opportunities for responsible growth.
3
We, at Bradley, Foster & Sargent, Inc., look forward to serving you through our management of the BFS Equity Fund by helping you to achieve your long term financial objectives.
Keith LaRose
Lead Portfolio Manager
Tim Foster
Co-Portfolio Manager
Tom Sargent
Co-Portfolio Manager
4
Investment Results – (Unaudited)
| Total Returns* (For the period ended November 30, 2013) | ||||||
| Since Inception (November 8, 2013) | ||||||
BFS Equity Fund | 2.20 | % | ||||
S&P 500® Index** | 3.51 | % | ||||
Total annual operating expenses, as disclosed in the Fund’s prospectus dated September 24, 2013, were 2.21% of average daily net assets (1.26% after fees waivers and expense reimbursements by Bradley, Foster & Sargent, Inc. (the “Adviser”)). The Adviser has contractually agreed to waive or limit its fees and to assume other expenses of the Fund until September 30, 2014, so that total annual fund operating expenses do not exceed 1.00%. This contractual arrangement may only be terminated by mutual consent of the Adviser and the Board of Trustees of the Trust, and it will automatically terminate upon the termination of the investment advisory agreement between the Fund and the Adviser. This operating expense limitation does not apply to: (i) interest, (ii) taxes, (iii) brokerage commissions, (iv) other expenditures which are capitalized in accordance with generally accepted accounting principles, (v) other extraordinary expenses not incurred in the fiscal year. The operating expense limitation also excludes any “Fees and Expenses of Acquired Funds,” which are the expenses indirectly incurred by the Fund as a result of investing in money market funds or other investment companies, including ETFs, that have their own expenses. The Adviser may be entitled to the reimbursement of any fees waived or expenses reimbursed pursuant to the agreement provided overall expenses fall below the limitation set forth above. The Adviser may recoup the sum of all fees previously waived or expenses reimbursed during any of the previous three (3) years, less any reimbursement previously paid, provided total expenses do not exceed the limitation set forth above.
The performance quoted represents past performance, which does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. Current performance of a Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-855-575-2430.
| * | Return figures reflect any change in price per share and assume the reinvestment of all distributions. |
| ** | The S&P 500® Index is a widely recognized unmanaged index of equity prices and is representative of a broader market and range of securities than is found in the Fund’s portfolio. The Index is an unmanaged benchmark that assumes reinvestment of all distributions and excludes the effect of taxes and fees. Individuals cannot invest directly in this Index; however, an individual can invest in exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index. |
The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company and may be obtained by calling 1-855-575-2430. Please read it carefully before investing.
The Fund is distributed by Unified Financial Securities, Inc., Member FINRA.
5
FUND HOLDINGS – (Unaudited)
BFS Equity Fund Holdings as November 30, 20131
| 1 | As a percent of net assets. |
AVAILABILITY OF PORTFOLIO SCHEDULE – (Unaudited)
The Fund will file its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q will be available at the SEC’s website at www.sec.gov. The Form N-Q may be reviewed and copied at the Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
6
ABOUT THE FUND’S EXPENSES – (Unaudited)
As a shareholder of the Fund, you 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 six month period, June 1, 2013 to November 30, 2013.
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 that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.60), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period Ended November 30, 2013” to estimate the expenses you paid on your account during this 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 ratios 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), or exchange fees. Therefore, the second line of the table is useful in comparing 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 would have been higher.
BFS Equity Fund | Beginning Account Value | Ending Account Value November 30, 2013 | Expenses Paid During the Period Ended November 30, 2013 | |||||||||
Actual | $ | 1,000.00 | $ | 1,022.00 | $ | 0.80 | * | |||||
Hypothetical ** (5% return before expenses) | $ | 1,000.00 | $ | 1,018.68 | $ | 6.31 | ||||||
| * | Expenses are equal to the Fund’s annualized expense ratio of 1.25%, multiplied by the average account value over the period, multiplied by 23/365 (to reflect the period since commencement of operations on November 8, 2013). |
| ** | Assumes a 5% return before expenses. The hypothetical example is calculated based on a six month period June 1, 2013 to November 30, 2013. Accordingly, expenses are equal to the Fund’s annualized expense ratio of 1.25% multiplied by the average account value over the six month period, multiplied by 183/365 (to reflect the one-half year period). |
7
BFS Equity Fund
Schedule of Investments
November 30, 2013 (Unaudited)
| Shares | Fair Value | |||||||
Common Stocks — 98.77% | ||||||||
Aerospace & Defense — 2.72% | ||||||||
United Technologies Corp. | 1,500 | $ | 166,290 | |||||
|
| |||||||
Beverages — 1.93% | ||||||||
PepsiCo, Inc. | 1,400 | 118,244 | ||||||
|
| |||||||
Biotechnology — 1.84% | ||||||||
Gilead Sciences, Inc. * | 1,500 | 112,215 | ||||||
|
| |||||||
Capital Markets — 1.43% | ||||||||
State Street Corp. | 1,200 | 87,132 | ||||||
|
| |||||||
Chemicals — 4.58% | ||||||||
Monsanto Co. | 700 | 79,331 | ||||||
Praxair, Inc. | 700 | 88,382 | ||||||
Westlake Chemical Corp. | 1,000 | 112,580 | ||||||
|
| |||||||
| 280,293 | ||||||||
|
| |||||||
Commercial Banks — 6.96% | ||||||||
HSBC Holdings PLC ADR | 3,000 | 168,300 | ||||||
M&T Bank Corp. | 1,200 | 138,432 | ||||||
Wells Fargo & Co. | 2,700 | 118,854 | ||||||
|
| |||||||
| 425,586 | ||||||||
|
| |||||||
Computers & Peripherals — 2.73% | ||||||||
Apple, Inc. | 300 | 166,821 | ||||||
|
| |||||||
Consumer Finance — 1.96% | ||||||||
American Express Co. | 1,400 | 120,120 | ||||||
|
| |||||||
Diversified Financial Services — 3.27% | ||||||||
JPMorgan Chase & Co. | 3,500 | 200,270 | ||||||
|
| |||||||
Electronic Equipment, Instruments & Components — 1.81% | ||||||||
Amphenol Corp. - Class A | 1,300 | 110,500 | ||||||
|
| |||||||
Food & Staples Retailing — 3.49% | ||||||||
Costco Wholesale Corp. | 900 | 112,887 | ||||||
Walgreen Co. | 1,700 | 100,640 | ||||||
|
| |||||||
| 213,527 | ||||||||
|
| |||||||
Food Products — 2.92% | ||||||||
McCormick & Co., Inc. | 1,000 | 69,000 | ||||||
Nestle SA ADR | 1,500 | 109,665 | ||||||
|
| |||||||
| 178,665 | ||||||||
|
| |||||||
Hotels, Restaurants & Leisure — 5.19% | ||||||||
McDonalds Corp. | 1,300 | 126,581 | ||||||
Starbucks Corp. | 1,200 | 97,752 | ||||||
Yum! Brands, Inc. | 1,200 | 93,216 | ||||||
|
| |||||||
| 317,549 | ||||||||
|
| |||||||
See accompanying notes which are an integral part of these financial statements.
8
BFS Equity Fund
Schedule of Investments
November 30, 2013 (Unaudited) (continued)
| Shares | Fair Value | |||||||
Household Products — 2.67% | ||||||||
Colgate-Palmolive Co. | 1,200 | $ | 78,972 | |||||
Procter & Gamble Co. | 1,000 | 84,220 | ||||||
|
| |||||||
| 163,192 | ||||||||
|
| |||||||
Industrial Conglomerates — 4.19% | ||||||||
Danaher Corp. | 2,000 | 149,600 | ||||||
General Electric Co. | 4,000 | 106,640 | ||||||
|
| |||||||
| 256,240 | ||||||||
|
| |||||||
Insurance — 1.63% | ||||||||
Travelers Cos., Inc./The | 1,100 | 99,814 | ||||||
|
| |||||||
Internet Software & Services — 4.00% | ||||||||
eBay, Inc. * | 1,700 | 85,884 | ||||||
Google, Inc. - Class A * | 150 | 158,938 | ||||||
|
| |||||||
| 244,822 | ||||||||
|
| |||||||
Life Sciences Tools & Services — 2.47% | ||||||||
Thermo Fisher Scientific, Inc. | 1,500 | 151,275 | ||||||
|
| |||||||
Machinery — 1.24% | ||||||||
Deere & Co. | 900 | 75,816 | ||||||
|
| |||||||
Media — 3.58% | ||||||||
Discovery Communications, Inc. * | 1,300 | 113,451 | ||||||
Walt Disney Co./The | 1,500 | 105,810 | ||||||
|
| |||||||
| 219,261 | ||||||||
|
| |||||||
Oil, Gas & Consumable Fuels — 8.88% | ||||||||
Continental Resources, Inc. * | 900 | 96,759 | ||||||
EOG Resources, Inc. | 400 | 66,000 | ||||||
Exxon Mobil Corp. | 1,000 | 93,480 | ||||||
Noble Energy, Inc. | 648 | 45,516 | ||||||
Occidental Petroleum Corp. | 600 | 56,976 | ||||||
Plains GP Holdings LP (a) * | 5,000 | 117,500 | ||||||
Spectra Energy Corp. | 2,000 | 67,100 | ||||||
|
| |||||||
| 543,331 | ||||||||
|
| |||||||
Pharmaceuticals — 11.08% | ||||||||
Abbott Laboratories | 3,000 | 114,570 | ||||||
Johnson & Johnson | 2,000 | 189,320 | ||||||
Merck & Co., Inc. | 2,000 | 99,660 | ||||||
Novartis AG ADR | 1,500 | 118,680 | ||||||
Zoetis, Inc. | 5,000 | 155,750 | ||||||
|
| |||||||
| 677,980 | ||||||||
|
| |||||||
Professional Services — 1.62% | ||||||||
Nielsen Holdings NV | 2,300 | 99,268 | ||||||
|
| |||||||
Real Estate Investment Trust — 2.05% | ||||||||
WP Carey, Inc. | 2,000 | 125,540 | ||||||
|
| |||||||
Road & Rail — 1.84% | ||||||||
Canadian National Railway Co. | 2,000 | 112,500 | ||||||
|
| |||||||
See accompanying notes which are an integral part of these financial statements.
9
BFS Equity Fund
Schedule of Investments
November 30, 2013 (Unaudited) (continued)
| Shares | Fair Value | |||||||
Software — 3.59% | ||||||||
Microsoft Corp. | 2,500 | $ | 95,325 | |||||
SAP AG ADR | 1,500 | 124,080 | ||||||
|
| |||||||
| 219,405 | ||||||||
|
| |||||||
Specialty Retail — 1.58% | ||||||||
Home Depot, Inc./The | 1,200 | 96,804 | ||||||
|
| |||||||
Textiles, Apparel & Luxury Goods — 3.10% | ||||||||
LVMH Moet Hennessy Louis Vuitton SA ADR | 2,500 | 94,457 | ||||||
NIKE, Inc. | 1,200 | 94,968 | ||||||
|
| |||||||
| 189,425 | ||||||||
|
| |||||||
Tobacco — 1.89% | ||||||||
Genesee & Wyoming, Inc. - Class A * | 1,200 | 115,440 | ||||||
|
| |||||||
Trading Companies & Distributors — 2.53% | ||||||||
W.W. Grainger, Inc. | 600 | 154,752 | ||||||
|
| |||||||
Total Common Stocks | 6,042,077 | |||||||
|
| |||||||
Money Market Securities — 38.26% | ||||||||
Fidelity Institutional Money Market Funds - Prime Money Market Portfolio, 0.05% (b) | 2,340,657 | 2,340,657 | ||||||
|
| |||||||
Total Money Market Securities | 2,340,657 | |||||||
|
| |||||||
Total Investments – 137.03% | 8,382,734 | |||||||
|
| |||||||
Liabilities in Excess of Other Assets – (37.03)% | (2,265,503 | ) | ||||||
|
| |||||||
TOTAL NET ASSETS – 100.00% | $ | 6,117,231 | ||||||
|
| |||||||
| (a) | Master Limited Partnership. |
| (b) | Rate disclosed is the seven day yield as of November 30, 2013. |
| * | Non-income producing security. |
ADR — American Depositary Receipt
See accompanying notes which are an integral part of these financial statements.
10
BFS Equity Fund
Statement of Assets and Liabilities
November 30, 2013
(Unaudited)
Assets | ||||
Investments in securities at fair value (cost $8,330,744) | $ | 8,382,734 | ||
Receivable for fund shares sold | 1,000 | |||
Receivable for investments sold | 381,087 | |||
Dividends receivable | 3,910 | |||
Receivable from Adviser | 13,331 | |||
Deferred offering costs | 2,758 | |||
Deferred organizational costs | 982 | |||
|
| |||
Total Assets | 8,785,802 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 2,648,911 | |||
Payable to administrator, fund accountant, and transfer agent | 6,090 | |||
Payable to custodian | 275 | |||
Payable to trustees | 437 | |||
Distribution fees accrued | 487 | |||
Other accrued expenses | 12,371 | |||
|
| |||
Total Liabilities | 2,668,571 | |||
|
| |||
Net Assets | $ | 6,117,231 | ||
|
| |||
Net Assets consist of: | ||||
Paid-in capital | $ | 6,065,086 | ||
Accumulated undistributed net investment income | 1,452 | |||
Accumulated undistributed net realized loss on investments | (1,297 | ) | ||
Net unrealized appreciation on investments | 51,990 | |||
|
| |||
Net Assets | $ | 6,117,231 | ||
|
| |||
Shares outstanding (unlimited number of shares authorized, no par value) | 598,641 | |||
|
| |||
Net asset value, offering and redemption price per share | $ | 10.22 | ||
|
|
See accompanying notes which are an integral part of these financial statements.
11
BFS Equity Fund
Statement of Operations
For the period ended November 30, 2013 (a)
(Unaudited)
Investment Income | ||||
Dividend income (net of foreign taxes withheld of $124) | $ | 4,041 | ||
|
| |||
Total investment income | 4,041 | |||
|
| |||
Expenses | ||||
Investment Adviser | 1,460 | |||
Administration | 2,214 | |||
Distribution (12b-1) | 487 | |||
Fund accounting | 1,582 | |||
Transfer agent | 2,294 | |||
Legal | 949 | |||
Custodian | 275 | |||
Audit | 1,851 | |||
Trustee | 437 | |||
Pricing | 67 | |||
Printing | 533 | |||
Offering costs | 2,758 | |||
Organizational costs | 982 | |||
Chief Compliance Officer | 196 | |||
Miscellaneous | 1,295 | |||
|
| |||
Total expenses | 17,380 | |||
|
| |||
Fees waived and reimbursed by Adviser | (14,791 | ) | ||
|
| |||
Net operating expenses | 2,589 | |||
|
| |||
Net investment income | 1,452 | |||
|
| |||
Net Realized and Unrealized Gains / (Losses) on Investments | ||||
Net realized losses on investment securities transactions | (1,297 | ) | ||
Net change in unrealized appreciation on investment securities | 51,990 | |||
|
| |||
Net realized and unrealized gains on investments | 50,693 | |||
|
| |||
Net increase in net assets resulting from operations | $ | 52,145 | ||
|
|
| (a) | For the period November 8, 2013 (commencement of operations) to November 30, 2013. |
See accompanying notes which are an integral part of these financial statements.
12
BFS Equity Fund
Statement of Changes in Net Assets
| For the Period Ended November 30, 2013 (a) (Unaudited) | ||||
Increase in Net Assets due to: | ||||
Operations | ||||
Net investment income | $ | 1,452 | ||
Net realized loss on investment transactions | (1,297 | ) | ||
Net change in unrealized appreciation on investment securities | 51,990 | |||
|
| |||
Net increase in net assets resulting from operations | 52,145 | |||
|
| |||
Capital Transactions | ||||
Proceeds from shares sold | 6,065,086 | |||
|
| |||
Net increase in net assets resulting from capital transactions | 6,065,086 | |||
|
| |||
Total Increase in Net Assets | 6,117,231 | |||
|
| |||
Net Assets | ||||
Beginning of period | — | |||
|
| |||
End of period | $ | 6,117,231 | ||
|
| |||
Accumulated net investment income | $ | 1,452 | ||
|
| |||
Share Transactions | ||||
Shares sold | 598,641 | |||
|
| |||
Net increase from share transactions | 598,641 | |||
|
| |||
| (a) | For the period November 8, 2013 (commencement of operations) to November 30, 2013. |
See accompanying notes which are an integral part of these financial statements.
13
BFS Equity Fund
Financial Highlights
(For a share outstanding during the period)
| For the period ended November 30, 2013 (Unaudited) (a) | ||||
Selected Per Share Data: | ||||
Net asset value, beginning of period | $ | 10.00 | ||
|
| |||
Income from investment operations: | ||||
Net investment income | — | (b) | ||
Net realized and unrealized gain on investments | 0.22 | |||
|
| |||
Total from investment operations | 0.22 | |||
|
| |||
Net asset value, end of period | $ | 10.22 | ||
|
| |||
Total Return (c) | 2.20 | % (d) | ||
Ratios and Supplemental Data: | ||||
Net assets, end of period (000) | $ | 6,117 | ||
Ratio of expenses to average net assets | 1.25 | % (e) | ||
Ratio of expenses to average net assets before waiver | 8.40 | % (e) | ||
Ratio of net investment income to average net assets | 0.70 | % (e) | ||
Ratio of net investment loss to average net assets before waiver | (6.45 | )% (e) | ||
Portfolio turnover rate | 7.05 | % (d) | ||
| (a) | For the period November 8, 2013 (commencement of operations) to November 30, 2013. |
| (b) | Amount is less than $0.005 per share. |
| (c) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends, if any. |
| (d) | Not annualized. |
| (e) | Annualized. |
See accompanying notes which are an integral part of these financial statements.
14
BFS Equity Fund
Notes to the Financial Statements
November 30, 2013
(Unaudited)
NOTE 1. ORGANIZATION
The BFS Equity Fund (the “Fund”) was organized as an open-end diversified series of the Valued Advisers Trust (the “Trust”) on July 23, 2013 and commenced operations on November 8, 2013. The Trust is a management investment company established under the laws of Delaware by an Agreement and Declaration of Trust dated June 13, 2008 (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 authorized by the Board of Trustees (the “Board”). The Fund’s investment adviser is Bradley, Foster & Sargent, Inc. (the “Adviser”). The investment objective of the Fund is long-term appreciation through growth of principal and income.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. These policies are in conformity with the generally accepted accounting principles in the United States of America (“GAAP”).
Securities Valuation – All investments in securities are recorded at their estimated fair value as described in Note 3.
Federal Income Taxes – The Fund makes no provision for federal income or excise tax. The Fund intends to qualify each year as a regulated investment company (“RIC”) under subchapter M of the Internal Revenue Code of 1986, as amended, by complying with the requirements applicable to RICs and by distributing substantially all of its taxable income. The Fund also intends to distribute sufficient net investment income and net capital gains, if any, so that it will not be subject to excise tax on undistributed income and gains. If the required amount of net investment income or gains is not distributed, the Fund could incur a tax expense.
As of and during the period ended November 30, 2013, 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 penalties. The Fund is subject to examination by U.S. federal tax authorities for all tax years since inception.
Expenses – Expenses incurred by the Trust that do not relate to a specific fund of the Trust are allocated to the individual funds based on each fund’s relative net assets or another appropriate basis (as determined by the Board).
Security Transactions and Related Income - The Fund follows industry practice and records security transactions on the trade date for financial reporting purposes. The Fund has chosen average cost as its standing (default) tax lot identification method for all shareholders. Interest income is recorded on an accrual basis and dividend income is recorded on the ex-dividend date except in the case of foreign securities, in which case dividends are generally recorded as soon as such information becomes available. Discounts and premiums on securities purchased are accreted or amortized using the effective interest method. The ability of issuers of debt securities held by the Fund to meet their obligations may be affected by economic and political developments in a specific country or region. Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates.
Dividends and Distributions – The Fund intends to distribute its net realized long term capital gains and its net realized short term capital gains, if any, at least once a year. Dividends to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The treatment for financial reporting purposes of distributions made to shareholders during the period from net investment income or net realized capital gains may differ from their ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of the net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications will have no effect on net assets, results of operations or net asset values per share of the Fund.
15
BFS Equity Fund
Notes to the Financial Statements - continued
November 30, 2013
(Unaudited)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS
Fair value is defined as the price that a Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. Accounting principles generally accepted in the United States of America (“GAAP”) have established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and establish classification of fair value measurements for disclosure purposes.
Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.
| • | Level 1 – quoted prices in active markets for identical securities |
| • | Level 2 – other significant observable inputs (including, but not limited to, quoted prices for an identical security in an inactive market, quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
| • | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining fair value of investments based on the best information available) |
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Equity securities, including common stocks, are generally valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Fund believes such prices more accurately reflect the fair value of such securities. Securities that are traded on any stock exchange are generally valued by the pricing service at the last quoted sale price. Lacking a last sale price, an exchange traded security is generally valued by the pricing service at its last bid price. Securities traded in the NASDAQ over-the-counter market are generally valued by the pricing service at the NASDAQ Official Closing Price. When using the market quotations or close prices provided by the pricing service and when the market is considered active, the security will be classified as a Level 1 security. Sometimes, an equity security owned by the Fund will be valued by the pricing service with factors other than market quotations or when the market is considered inactive. When this happens, the security will be classified as a Level 2 security. When market quotations are not readily available, when the Fund determines that the market quotation or the price provided by the pricing service does not accurately reflect the current fair value, or when restricted or illiquid securities are being valued, such securities are valued as determined in good faith by the Fund, in conformity with guidelines adopted by and subject to review by the Board. These securities will be categorized as Level 3 securities.
Investments in mutual funds, including money market mutual funds, are generally priced at the ending net asset value (NAV) provided by the service agent of the funds. These securities will be categorized as Level 1 securities.
In accordance with the Trust’s good faith pricing guidelines, the Fund is required to consider all appropriate factors relevant to the value of securities for which it has determined other pricing sources are not available or reliable as described above. No single standard exists for determining fair value, because fair value depends upon the circumstances of each individual case. As a general principle, the current fair value of an issue of securities being valued by the Fund
16
BFS Equity Fund
Notes to the Financial Statements - continued
November 30, 2013
(Unaudited)
would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale. Methods which are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market of a similar freely traded security (including a derivative security or a basket of securities traded on other markets, exchanges or among dealers); or (iii) yield to maturity with respect to debt issues, or a combination of these and other methods. Good faith pricing is permitted if, in the Fund’s opinion, the validity of market quotations appears to be questionable based on factors such as evidence of a thin market in the security based on a small number of quotations, a significant event occurs after the close of a market but before a Fund’s NAV calculation that may affect a security’s value, or the Fund is aware of any other data that calls into question the reliability of market quotations. Good faith pricing may also be used in instances when the bonds the Fund invests in may default or otherwise cease to have market quotations readily available. Any fair valuation pricing done outside the Fund’s approved pricing methods must be approved by the Pricing Committee of the Board.
The following is a summary of the inputs used to value the Fund’s investments as of November 30, 2013:
| Valuation Inputs | ||||||||||||||||
Assets | Level 1 Quoted Prices in Active Markets | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Total | ||||||||||||
Common Stocks* | $ | 6,042,077 | $ | — | $ | — | $ | 6,042,077 | ||||||||
Money Market Securities | 2,340,657 | — | — | 2,340,657 | ||||||||||||
Total | $ | 8,382,734 | $ | — | $ | — | $ | 8,382,734 | ||||||||
| * | Refer to Schedule of Investments for industry classifications. |
The Fund did not hold any assets at any time during the reporting period in which significant unobservable inputs were used in determining fair value; therefore, no reconciliation of Level 3 securities is included for this reporting period. During the period ended November 30, 2013, the Fund had no transfers between any Levels. The Trust recognizes transfers between fair value hierarchy levels at the end of the reporting period.
NOTE 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the investment advisory agreement, on behalf of the Fund (the “Agreement”), the Adviser manages the Fund’s investments subject to oversight of the Board. As compensation for its services, the BFS Equity Fund is obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 0.75% of the average daily net assets of the Fund. For the period ended November 30, 2013, the Adviser earned a fee of $1,460 from the Fund before the reimbursement described below. At November 30, 2013, the Adviser owed the Fund $13,331.
The Adviser has contractually agreed to waive or limit its fee and reimburse certain Fund operating expenses, until September 30, 2014, so that the ratio of total annual operating expenses does not exceed 1.00%. This operating expense limitation does not apply to interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with generally accepted accounting principles, other extraordinary expenses not incurred in the ordinary course of the Fund’s business, dividend expense on short sales, expenses incurred under a plan of distribution under Rule 12b-1, and expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement, if applicable, incurred by the Fund in any fiscal year. The operating expense limitation also excludes any “Acquired Fund Fees and Expenses.” Acquired Fund Fees and Expenses represent the pro rata expense indirectly incurred by the Fund as a result of investing in other investment companies, including ETFs, closed-end funds and money market funds that have their own expenses. The Adviser may be entitled to the reimbursement of any fees waived or expenses reimbursed pursuant to the agreement provided overall expenses fall below the limitations set forth above. The Adviser may recoup the sum of all fees previously waived or expenses reimbursed during any of the previous three (3) years, less any reimbursement previously paid, provided total expenses do not exceed the limitation set forth above. For the period November 8, 2013 (commencement of operations) through November 30, 2013, expenses totaling $14,791 were waived or reimbursed by the Adviser and may be subject to potential recoupment by the Adviser until May 31, 2017.
17
BFS Equity Fund
Notes to the Financial Statements - continued
November 30, 2013
(Unaudited)
The Trust retains Huntington Asset Services, Inc. (“HASI”) to manage the Fund’s business affairs and provide the Fund with administrative services, including all regulatory reporting and necessary office equipment and personnel. For the period ended November 30, 2013, HASI earned fees of $2,214 for administrative services provided to the Fund. At November 30, 2013, HASI was owed $2,214 from the Fund for administrative services. Certain officers of the Trust are members of management and/or employees of HASI. HASI is a wholly-owned subsidiary of Huntington Bancshares, Inc., the parent company of Unified Financial Securities, Inc. (the “Distributor”) and Huntington National Bank, the custodian of the Fund’s investments (the “Custodian”). For the period ended November 30, 2013, the Custodian earned fees of $275 for custody services provided to the Fund. At November 30, 2013, the Custodian was owed $275 from the Fund for custody services.
The Trust also retains HASI to act as the Fund’s transfer agent and to provide fund accounting services. For the period ended November 30, 2013, HASI earned fees of $2,294 for transfer agent services to the Fund. At November 30, 2013, the Fund owed HASI $2,294 for transfer agent services. For the period ended November 30, 2013, HASI earned fees of $1,582 from the Fund for fund accounting services. At November 30, 2013, HASI was owed $1,582 from the Fund for fund accounting services.
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940 Act (the “Plan”). The Plan provides that the Fund will pay the Distributor and/or any registered securities dealer, financial institution or any other person (the “Recipient”) a shareholder servicing fee of 0.25% of the average daily net assets of the Fund in connection with the promotion and distribution of the Fund’s shares or the provision of personal services to shareholders, including, but not necessarily limited to, advertising, compensation to underwriters, dealers and selling personnel, the printing and mailing of prospectuses to other than current Fund shareholders, the printing and mailing of sales literature and servicing shareholder accounts (“12b-1 Expenses”). The Fund or Distributor may pay all or a portion of these fees to any recipient who renders assistance in distributing or promoting the sale of shares, or who provides certain shareholder services, pursuant to a written agreement. The Plan is a compensation plan, which means that the Plan will benefit shareholders because an effective sales program typically is necessary in order for the Fund to reach and maintain a sufficient size to achieve efficiently its investment objectives and to realize economies of scale.
Unified Financial Securities, Inc. acts as the principal distributor of the Fund’s shares. There were no payments made by the Fund to the Distributor during the period ended November 30, 2013. An officer of the Trust is an officer of the Distributor and such person may be deemed to be an affiliate of the Distributor.
NOTE 5. INVESTMENTS
For the period ended November 30, 2013, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations, were as follows:
Purchases | Sales | |||
| $ 6,417,452 | $ | 426,069 | ||
NOTE 6. ESTIMATES
The preparation of financial statements in conformity with 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 increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
18
BFS Equity Fund
Notes to the Financial Statements - continued
November 30, 2013
(Unaudited)
NOTE 7. FEDERAL TAX INFORMATION
The beneficial ownership, either directly or indirectly, of 25% or more of the voting securities of a fund creates a presumption of control of a fund, under Section 2(a) (9) of the Investment Company Act of 1940. At November 30, 2013, Charles Schwab & Co (“Charles Schwab”) owned, as record shareholder, 49.02% of the outstanding shares of the Fund. The Trust does not know whether Charles Schwab or any of the underlying beneficial owners owned or controlled 25% or more of the voting securities of the Fund.
NOTE 8. DISTRIBUTIONS TO SHAREHOLDERS
At November 30, 2013, the net unrealized appreciation (depreciation) of investments for tax purposes was as follows:
Gross Unrealized Appreciation | $ | 73,596 | ||
Gross Unrealized (Depreciation) | (21,606 | ) | ||
|
| |||
Net Unrealized Appreciation on Investments | $ | 51,990 | ||
|
|
At November 30, 2013, the aggregate cost of securities, excluding U.S. government obligations, for federal income tax purposes was $8,330,744 for the Fund.
NOTE 9. SUBSEQUENT EVENT
Management of the Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date these financial statements were issued. Based upon this evaluation, and at a Board meeting held December 9-11, 2013, Andrea N. Mullins was appointed to serve as Trustee to the Trust and Bryan W. Ashmus was appointed to serve as Principal Financial Officer and Treasurer. And effective January 15, 2014, Dr. Merwyn R. Vanderlind resigned as a Trustee of the Board.
19
Investment Advisory Agreement Approval (Unaudited)
At a meeting held on July 23, 2013, the Board of Trustees (the “Board”) considered the approval of the Investment Advisory Agreement (the “Agreement”) between the Trust and Bradley, Foster & Sargent, Inc. (the “Adviser”) with respect to the BFS Equity Fund (the “Fund”). Counsel noted that the 1940 Act requires the approval of the investment advisory agreement between the Trust and its investment adviser by the Board, including a majority of the Independent Trustees. The Board then specifically discussed the arrangements between the Adviser and the Trust with respect to the Fund. The Board reviewed a memorandum from Counsel, and addressed to the Trustees that summarized, among other things, the fiduciary duties and responsibilities of the Board in reviewing and approving the Agreement. A copy of this memorandum was circulated to the Trustees in advance of the Meeting. Counsel discussed with the Trustees the types of information and factors that should be considered by the Board in order to make an informed decision regarding the approval of the Agreement, including the following material factors: (i) the nature, extent, and quality of the services to be provided by the Adviser; (ii) the investment performance of the Fund; (iii) the costs of the services to be provided and profits to be realized by the Adviser from the relationship with the Fund; (iv) the extent to which economies of scale would be realized if the Fund grows and whether advisory fee levels reflect those economies of scale for the benefit of the Fund’s investors; and (v) the Adviser’s practices regarding possible conflicts of interest.
In assessing these factors and reaching its decisions, the Board took into consideration information furnished for the Board’s review and consideration presented at the Meeting. The Board requested and was provided with information and reports relevant to the consideration of the Agreement, including: (i) reports regarding the services and support to be provided to the Fund and its shareholders by the Adviser; (ii) presentations by Fund management addressing the Adviser’s investment philosophy, investment strategy, personnel and operations, as well as expectations for the Fund’s shareholders; (iii) disclosure information contained in the registration statement of the Trust and the Form ADV of the Adviser; and (iv) a memorandum from Counsel, that summarized the fiduciary duties and responsibilities of the Board in reviewing and approving the Agreement, including the material factors set forth above and the types of information included in each factor that should be considered by the Board in order to make an informed decision. The Board also requested and received various informational materials including, without limitation: (i) documents containing information about the Adviser, including financial information, a description of personnel and the services to be provided to the Fund, information on investment advice, performance, summaries of Fund expenses, compliance program, current legal matters, and other general information; (ii) comparative expense and performance information for other mutual funds with strategies similar to the Fund; (iii) the anticipated effect of size on the Fund’s performance and expenses; and (iv) benefits to be realized by the Adviser from its relationship with the Fund. The Board did not identify any particular information that was most relevant to its consideration to approve the Agreement and each Trustee may have afforded different weight to the various factors.
| 1. | The nature, extent, and quality of the services to be provided by the Adviser. In this regard, the Board considered responsibilities that the Adviser would have under the Advisory Agreement. The Trustees considered the services proposed to be provided by the Adviser to the Fund, including without limitation: the Adviser’s procedures for formulating investment recommendations and assuring compliance with the Fund’s investment objectives and limitations; the efforts of the Adviser during the Fund’s start-up phase, its anticipated coordination of services for the Fund among the Fund’s service providers, and its anticipated efforts to promote the Fund and grow its assets. The Trustees considered the Adviser’s continuity of, and commitment to retain, qualified personnel and the Adviser’s commitment to maintain and enhance its resources and systems, and the Adviser’s cooperation with the Board and Counsel for the Fund. The |
20
| Trustees considered the Adviser’s personnel, including the education and experience of the Adviser’s personnel and the Adviser’s compliance program, policies and procedures. After considering the foregoing information and further information in the Meeting materials provided by the Adviser (including the Adviser’s Form ADV), the Board concluded that, in light of all the facts and circumstances, the nature, extent, and quality of the services proposed to be provided by the Adviser will be satisfactory and adequate for the Fund. |
| 2. | Investment Performance of the Fund and the Adviser. The Board noted that while the Fund had not commenced operations and thus did not have investment performance information to review, the Board could consider the investment performance of the Adviser in managing accounts similar to the manner in which the Fund would be managed. The Board observed that while the separate accounts would not be subject to the same operations, expenses and restrictions as the Fund, the performance was very good. The Board concluded, in light of the foregoing factors, that the investment performance of the Adviser was satisfactory. |
| 3. | The costs of the services to be provided and profits to be realized by the Adviser from the relationship with the Fund. In this regard, the Board considered: the financial condition of the Adviser and the level of commitment to the Fund and the Adviser by the principals of the Adviser; the projected asset levels of the Fund; the Adviser’s payment of startup costs for the Fund; and the overall anticipated expenses of the Fund, including the expected nature and frequency of advisory fee payments. The Board also considered potential benefits for the Adviser in managing the Fund. The Board compared the expected fees and expenses of the Fund (including the management fee) to other funds comparable to the Fund in terms of the type of fund, the style of investment management, the anticipated size of fund and the nature of the investment strategy and markets invested in, among other factors. The Board determined that the management fee is higher than the average and median of its anticipated peer group; however, in light of the contractual Expense Limitation Agreement the Fund’s anticipated expense ratio was lower than that of its peer group. Following this comparison and upon further consideration and discussion of the foregoing, the Board concluded that the fees to be paid to the Adviser by the Fund were fair and reasonable. |
| 4. | The extent to which economies of scale would be realized as the Fund grows and whether advisory fee levels reflect these economies of scale for the benefit of the Fund’s investors. In this regard, the Board considered the Fund’s fee arrangements with the Adviser. The Board noted that the management fee would stay the same as asset levels increased, although it also noted that the shareholders of the Fund would benefit from the Expense Limitation Agreement. The Board also noted that the Fund would benefit from economies of scale under its agreements with service providers other than the Adviser. Following further discussion of the Fund’s projected asset levels, expectations for growth, and levels of fees, the Board determined that the Fund’s fee arrangements with the Adviser were fair and reasonable and reasonable in relation to the nature and quality of the services to be provided by the Adviser. |
| 5. | Possible conflicts of interest and benefits to the Adviser. In evaluating the possibility for conflicts of interest, the Board considered such matters as: the experience and ability of the advisory personnel assigned to the Fund; the basis of decisions to buy or sell securities for the Fund and/or the Adviser’s other accounts; the method for bunching of portfolio securities transactions; the substance and administration of the Adviser’s code of ethics and other relevant policies described in the Adviser’s Form ADV. The Board considered that with the growth of assets, the Adviser will benefit from soft dollars on trades generated for the Fund. With respect to benefits to the Adviser (in addition to the fees under the Advisory Agreement), the Board noted that the Adviser would benefit from its relationship with the Fund as the Fund would provide a |
21
| vehicle for the Adviser to market to smaller clients. Following further consideration and discussion, the Board indicated that the Adviser’s standards and practices relating to the identification and mitigation of potential conflicts of interest were satisfactory and the anticipated benefits to be realized by the Adviser from managing the Fund were acceptable. |
After additional consideration of the factors delineated in the memorandum provided by Counsel and further discussion among the Board, the Board determined to approve the Agreement between the Trust and the Adviser.
22
VALUED ADVISERS TRUST
PRIVACY POLICY
The following is a description of the policies of the Valued Advisers Trust (the “Trust”) regarding disclosure of nonpublic personal information that shareholders provide to a series of the Trust (each, a “Fund”) or that the Fund collects from other sources. In the event that a shareholder holds shares of a Fund through a broker-dealer or other financial intermediary, the privacy policy of the financial intermediary would govern how shareholder nonpublic personal information would be shared with nonaffiliated third parties.
Categories of Information A Fund May Collect. A Fund may collect the following nonpublic personal information about its shareholders:
| • | Information the Fund receives from a shareholder on applications or other forms, correspondence, or conversations (such as the shareholder’s name, address, phone number, social security number, and date of birth); and |
| • | Information about the shareholder’s transactions with the Fund, its affiliates, or others (such as the shareholder’s account number and balance, payment history, cost basis information, and other financial information). |
Categories of Information A Fund May Disclose. A Fund may not disclose any nonpublic personal information about its current or former shareholders to unaffiliated third parties, except as required or permitted by law. A Fund is permitted by law to disclose all of the information it collects, as described above, to its service providers (such as the Fund’s custodian, administrator, transfer agent, accountant and legal counsel) to process shareholder transactions and otherwise provide services to the shareholder.
Confidentiality and Security. Each Fund shall restrict access to shareholder nonpublic personal information to those persons who require such information to provide products or services to the shareholder. Each Fund shall maintain physical, electronic, and procedural safeguards that comply with federal standards to guard shareholder nonpublic personal information.
Disposal of Information. The Funds, through their transfer agent, have taken steps to reasonably ensure that the privacy of a shareholder’s nonpublic personal information is maintained at all times, including in connection with the disposal of information that is no longer required to be maintained by the Funds. Such steps shall include, whenever possible, shredding paper documents and records prior to disposal, requiring off-site storage vendors to shred documents maintained in such locations prior to disposal, and erasing and/or obliterating any data contained on electronic media in such a manner that the information can no longer be read or reconstructed.
23
OTHER INFORMATION
The Fund’s Statement of Additional Information (“SAI”) includes additional information about the trustees and is available without charge, upon request. You may call toll-free at (855) 575-2430 to request a copy of the SAI or to make shareholder inquiries.
24
PROXY VOTING
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted those proxies during the most recent twelve month period ended June 30, will be available without charge upon request by (1) calling the Fund at (855) 575-2430 and (2) from Fund documents filed with the Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov.
TRUSTEES
R. Jeffrey Young, Chairman
Ira Cohen
Andrea N. Mullins
OFFICERS
R. Jeffrey Young, Principal Executive Officer and President
John C. Swhear, Chief Compliance Officer, AML Officer and Vice-President
Carol J. Highsmith, Vice President
Matthew J. Miller, Vice President
Bryan W. Ashmus, Principal Financial Officer and Treasurer
Heather A. Bonds, Secretary
INVESTMENT ADVISER
Bradley, Foster & Sargent
185 Asylum Street, City Place II
Hartford, Connecticut 06103
DISTRIBUTOR
Unified Financial Securities, Inc.
2960 North Meridian Street, Suite 300
Indianapolis, IN 46208
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Cohen Fund Audit Services, Ltd.
1350 Euclid Avenue, Suite 800
Cleveland, OH 44115
LEGAL COUNSEL
The Law Offices of John H. Lively & Associates, Inc.
A member firm of The 1940 Act Law Group TM
11300 Tomahawk Creek Parkway, Suite 310
Leawood, KS 66211
CUSTODIAN
Huntington National Bank
41 South High Street
Columbus, OH 43215
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT
Huntington Asset Services, Inc.
2960 North Meridian Street, Suite 300
Indianapolis, IN 46208
This report is intended only for the information of shareholders or those who have received the Fund’s prospectus which contains information about the Fund’s management fee and expenses. Please read the prospectus carefully before investing.
Distributed by Unified Financial Securities, Inc.
Member FINRA/SIPC
25
SEMI-ANNUAL REPORT
November 30, 2013
CLOUD CAPITAL FUNDS
Cloud Capital Strategic Large Cap Fund
Cloud Capital Strategic Mid Cap Fund
Fund Adviser:
Cloud Capital LLC
5314 South Yale, Suite 606
Tulsa, OK 74135
Toll Free (877) 670-2227
Cloud Capital Strategic Large Cap Fund
Investment Results – (Unaudited)
Total Returns*
(For the periods ended November 30, 2013)
| Cumulative | Average Annual Returns | |||||||||||
| Six Months | One Year | Since Inception (June 29, 2011) | ||||||||||
Cloud Capital Strategic Large Cap Fund – Institutional Class | 11.29 | % | 29.43 | % | 13.66 | % | ||||||
S&P 500® Index** | 11.91 | % | 30.30 | % | 17.20 | % | ||||||
Total annual operating expenses, as disclosed in the Fund’s prospectus dated September 30, 2013, were 1.41% of average daily net assets. Cloud Capital LLC (the “Adviser”) has contractually agreed to waive expenses of the Fund until May 31, 2014, so that Total Annual Fund Operating Expenses does not exceed 1.40%. This operating expense limitation does not apply to brokerage fees and commisions, borrowing costs (such as interest and dividend expenses on securities sold short), taxes, extraordinary expenses, fees and expenses paid under a distribution plan adopted pursuant to Rule 12b-1, and indirect expenses (such as “Acquired Fund Fees and Expenses”). The Adviser may be entitled to reimbursement of any fees waived or expenses reimbursed pursuant to the agreement provided overall expenses fall below the limitations set forth above. The Adviser may recoup the sum of all fees previously waived or expenses reimbursed during any of the previous three (3) years, less any reimbursement previously paid, provided total expenses do not exceed the limitation set forth above. This agreement may only be terminated by mutual consent of the Adviser and the Fund.
The performance quoted represents past performance, which does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. Current performance of a Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-877-670-2227.
* Return figures reflect any change in price per share and assume the reinvestment of all distributions.
** The S&P 500® Index is a widely recognized unmanaged index of equity prices and is representative of a broader market and range of securities than is found in the Fund’s portfolio. The Index is an unmanaged benchmark that assumes reinvestment of all distributions and excludes the effect of taxes and fees. Individuals cannot invest directly in this Index; however, an individual can invest in exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index.
The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company and may be obtained by calling 1-877-670-2227. Please read it carefully before investing.
The Fund is distributed by Unified Financial Securities, Inc., Member FINRA.
1
Cloud Capital Strategic Mid Cap Fund
Investment Results – (Unaudited)
Total Returns*
(For the periods ended November 30, 2013)
| Cumulative | Average Annual Returns | |||||||||||
| Six Months | One Year | Since Inception (June 29, 2011) | ||||||||||
Cloud Capital Strategic Mid Cap Fund – Institutional Class | 10.10 | % | 28.20 | % | 11.67 | % | ||||||
S&P MidCap 400® Index** | 10.93 | % | 32.33 | % | 14.94 | % | ||||||
Total annual operating expenses, as disclosed in the Fund’s prospectus dated September 30, 2013, were 1.62% of average daily net assets. Cloud Capital LLC (the “Adviser”) has contractually agreed to waive expenses of the Fund until May 31, 2014, so that Total Annual Fund Operating Expenses does not exceed 1.40%. This operating expense limitation does not apply to brokerage fees and commissions, borrowing costs (such as interest and dividend expenses on securities sold short), taxes, extraordinary expenses, fees and expenses paid under a distribution plan adopted pursuant to Rule 12b-1, and indirect expenses (such as “Acquired Fund Fees and Expenses”). The Adviser may be entitled to reimbursement of any fees waived or expenses reimbursed pursuant to the agreement provided overall expenses fall below the limitations set forth above. The Adviser may recoup the sum of all fees previously waived or expenses reimbursed during any of the previous three (3) years, less any reimbursement previously paid, provided total expenses do not exceed the limitation set forth above. This agreement may only be terminated by mutual consent of the Adviser and the Fund.
The performance quoted represents past performance, which does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. Current performance of a Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-877-670-2227.
* Return figures reflect any change in price per share and assume the reinvestment of all distributions.
** The S&P MidCap 400® Index is a widely recognized unmanaged index of equity prices and is representative of a broader market and range of securities than is found in the Fund’s portfolio. The Index is an unmanaged benchmark that assumes reinvestment of all distributions and excludes the effect of taxes and fees. Individuals cannot invest directly in this Index; however, an individual can invest in exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index.
The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company and may be obtained by calling 1-877-670-2227. Please read it carefully before investing.
The Fund is distributed by Unified Financial Securities, Inc., Member FINRA.
2
FUND HOLDINGS – (Unaudited)
1 As a percent of net assets.
The investment objective of the Cloud Capital Strategic Large Cap Fund is to consistently deliver excess returns relative to the S&P 500® Index over three- to five-year time horizons.
1 As a percent of net assets.
The investment objective of the Cloud Capital Strategic Mid Cap Fund is to consistently deliver excess returns relative to the S&P MidCap 400® Index over three- to five-year time horizons.
3
AVAILABILITY OF PORTFOLIO SCHEDULE – (Unaudited)
The Funds file its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available at the SEC’s website at www.sec.gov. The Forms N-Q may be reviewed and copied at the Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
ABOUT THE FUNDS’ EXPENSES – (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs (such as short-term redemption fees); 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 June 1, 2013 to November 30, 2013.
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 that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.60), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this 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 ratios 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 the other funds.
4
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), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing 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 would have been higher.
Cloud Capital Strategic Large Cap Fund – | Beginning June 1, 2013 | Ending Account Value November 30, | Expenses Paid During the Period Ended November 30, 2013* | |||||||||
Actual | $ | 1,000.00 | $ | 1,112.90 | $ | 7.42 | ||||||
Hypothetical ** (5% return before expenses) | $ | 1,000.00 | $ | 1,018.05 | $ | 7.08 | ||||||
* Expenses are equal to the Cloud Capital Strategic Large Cap Fund’s annualized expense ratio of 1.40%, multiplied by the average account value over the period, multiplied by 183/365.
** Assumes a 5% return before expenses.
Cloud Capital Strategic Mid Cap Fund – | Beginning June 1, 2013 | Ending Account Value November 30, | Expenses Paid During the Period Ended November 30, 2013* | |||||||||
Actual | $ | 1,000.00 | $ | 1,101.00 | $ | 7.37 | ||||||
Hypothetical ** (5% return before expenses) | $ | 1,000.00 | $ | 1,018.05 | $ | 7.08 | ||||||
* Expenses are equal to the Cloud Capital Strategic Mid Cap Fund’s annualized expense ratio of 1.40%, multiplied by the average account value over the period, multiplied by 183/365.
** Assumes a 5% return before expenses.
5
Cloud Capital Strategic Large Cap Fund
Schedule of Investments
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Common Stocks – 89.1% | |||||||
| Consumer Discretionary – 10.6% | |||||||
| 1,425 | Abercrombie & Fitch Co., Class A | $ | 48,847 | |||||
| 189 | Amazon.com, Inc. * | 74,502 | ||||||
| 1,181 | AutoNation, Inc. * | 57,920 | ||||||
| 129 | AutoZone, Inc. * | 59,322 | ||||||
| 733 | Bed Bath & Beyond, Inc. * | 57,214 | ||||||
| 1,515 | Best Buy Co., Inc. | 61,453 | ||||||
| 557 | BorgWarner, Inc. | 59,654 | ||||||
| 1,452 | Carnival Corp. | 52,423 | ||||||
| 1,027 | CBS Corp., Class B | 60,166 | ||||||
| 135 | Chipotle Mexican Grill, Inc. * | 70,848 | ||||||
| 1,032 | Coach, Inc. | 59,737 | ||||||
| 1,326 | Comcast Corp., Class A | 66,107 | ||||||
| 2,890 | D.R. Horton, Inc. | 57,455 | ||||||
| 1,173 | Darden Restaurants, Inc. | 62,562 | ||||||
| 979 | Delphi Automotive PLC | 57,347 | ||||||
| 939 | DIRECTV * | 62,075 | ||||||
| 681 | Discovery Communications, Inc., Class A * | 59,400 | ||||||
| 989 | Dollar General Corp. * | 56,317 | ||||||
| 1,007 | Dollar Tree, Inc. * | 56,012 | ||||||
| 1,133 | Expedia, Inc. | 72,148 | ||||||
| 755 | Family Dollar Stores, Inc. | 52,658 | ||||||
| 3,314 | Ford Motor Co. | 56,607 | ||||||
| 470 | Fossil Group, Inc. * | 59,867 | ||||||
| 1,035 | GameStop Corp., Class A | 49,956 | ||||||
| 2,171 | Gannett Co., Inc. | 58,747 | ||||||
| 1,322 | Gap, Inc./The | 54,143 | ||||||
| 1,360 | Garmin Ltd. | 66,061 | ||||||
| 1,561 | General Motors Co. * | 60,462 | ||||||
| 686 | Genuine Parts Co. | 56,845 | ||||||
| 2,871 | Goodyear Tire & Rubber Co./The | 63,913 | ||||||
| 95 | Graham Holdings Co. | 63,818 | ||||||
| 1,869 | H & R Block, Inc. | 52,136 | ||||||
| 911 | Harley-Davidson, Inc. | 61,084 | ||||||
| 804 | Harman International Industries, Inc. | 65,161 | ||||||
See accompanying notes which are an integral part of these financial statements.
6
Cloud Capital Strategic Large Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Consumer Discretionary – (continued) | |||||||
| 1,188 | Hasbro, Inc. | $ | 63,931 | |||||
| 725 | Home Depot, Inc./The | 58,467 | ||||||
| 2,810 | International Game Technology | 49,139 | ||||||
| 3,398 | Interpublic Group of Cos., Inc./The | 59,122 | ||||||
| 1,314 | Johnson Controls, Inc. | 66,356 | ||||||
| 1,085 | Kohl’s Corp. | 59,987 | ||||||
| 931 | L Brands, Inc. * | 60,509 | ||||||
| 1,831 | Leggett & Platt, Inc. | 55,317 | ||||||
| 1,644 | Lennar Corp., Class A | 58,775 | ||||||
| 1,155 | Lowe’s Companies, Inc. | 54,855 | ||||||
| 1,232 | Macy’s, Inc. | 65,625 | ||||||
| 1,337 | Marriott International, Inc., Class A | 62,876 | ||||||
| 1,327 | Mattel, Inc. | 61,412 | ||||||
| 573 | McDonalds Corp. | 55,779 | ||||||
| 381 | Murphy USA, Inc. * | 17,261 | ||||||
| 194 | Netflix, Inc. * | 70,928 | ||||||
| 2,135 | Newell Rubbermaid, Inc. | 64,805 | ||||||
| 3,404 | News Corp., Class A * | 61,130 | ||||||
| 855 | NIKE, Inc., Class B | 67,652 | ||||||
| 958 | Nordstrom, Inc. | 59,615 | ||||||
| 891 | Omnicom Group, Inc. | 63,666 | ||||||
| 448 | O’Reilly Automotive, Inc. * | 55,942 | ||||||
| 783 | PetSmart, Inc. | 58,017 | ||||||
| 58 | Priceline.com, Inc. * | 69,018 | ||||||
| 3,374 | Pulte Group, Inc. | 63,305 | ||||||
| 432 | PVH Corp. | 57,810 | ||||||
| 319 | Ralph Lauren Corp. | 55,888 | ||||||
| 810 | Ross Stores, Inc. | 61,931 | ||||||
| 738 | �� | Scripps Networks Interactive, Inc., Class A | 55,075 | |||||
| 3,916 | Staples, Inc. | 60,812 | ||||||
| 761 | Starbucks Corp. | 61,958 | ||||||
| 828 | Starwood Hotels & Resorts Worldwide, Inc. | 61,675 | ||||||
| 860 | Target Corp. | 54,992 | ||||||
| 690 | Tiffany & Co. | 61,468 | ||||||
| 516 | Time Warner Cable, Inc., Class A | 71,299 | ||||||
| 879 | Time Warner, Inc. | 57,759 | ||||||
See accompanying notes which are an integral part of these financial statements.
7
Cloud Capital Strategic Large Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Consumer Discretionary – (continued) | |||||||
| 1,006 | TJX Cos., Inc./The | $ | 63,285 | |||||
| 758 | TripAdvisor, Inc. * | 66,989 | ||||||
| 1,696 | Twenty-First Century Fox, Inc. * | 56,790 | ||||||
| 1,297 | Urban Outfitters, Inc. * | 50,595 | ||||||
| 290 | VF Corp. | 68,038 | ||||||
| 687 | Viacom, Inc., Class B | 55,055 | ||||||
| 879 | Walt Disney Co./The | 61,987 | ||||||
| 413 | Whirlpool Corp. | 63,071 | ||||||
| 909 | Wyndham Worldwide Corp. | 65,185 | ||||||
| 382 | Wynn Resorts Ltd. | 63,284 | ||||||
| 760 | Yum! Brands, Inc. | 59,063 | ||||||
|
| |||||||
| 4,850,465 | ||||||||
|
| |||||||
| Consumer Staples – 10.0% | |||||||
| 3,303 | Altria Group, Inc. | 122,134 | ||||||
| 3,188 | Archer-Daniels-Midland Co. | 128,334 | ||||||
| 1,796 | Beam, Inc. | 121,260 | ||||||
| 1,611 | Brown-Forman Corp., Class B | 120,839 | ||||||
| 2,445 | Campbell Soup Co. | 94,688 | ||||||
| 1,344 | Clorox Co./The | 125,246 | ||||||
| 2,923 | Coca-Cola Co./The | 117,465 | ||||||
| 2,986 | Coca-Cola Enterprises, Inc. | 125,217 | ||||||
| 1,912 | Colgate-Palmolive Co. | 125,833 | ||||||
| 3,219 | ConAgra Foods, Inc. | 106,195 | ||||||
| 1,997 | Constellation Brands, Inc., Class A * | 140,617 | ||||||
| 990 | Costco Wholesale Corp. | 124,137 | ||||||
| 1,905 | CVS Caremark Corp. | 127,582 | ||||||
| 2,462 | Dr. Pepper Snapple Group, Inc. | 118,797 | ||||||
| 1,644 | Estee Lauder Cos., Inc./The, Class A | 123,236 | ||||||
| 2,250 | General Mills, Inc. | 113,446 | ||||||
| 1,187 | Hershey Co./The | 115,011 | ||||||
| 2,636 | Hormel Foods Corp. | 118,656 | ||||||
| 1,041 | JM Smucker Co./The | 108,554 | ||||||
| 1,807 | Kellogg Co. | 109,557 | ||||||
| 1,178 | Kimberly-Clark Corp. | 128,546 | ||||||
| 2,160 | Kraft Foods Group, Inc. | 114,750 | ||||||
See accompanying notes which are an integral part of these financial statements.
8
Cloud Capital Strategic Large Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Consumer Staples – (continued) | |||||||
| 2,981 | Kroger Co./The | $ | 124,450 | |||||
| 2,575 | Lorillard, Inc. | 132,152 | ||||||
| 1,612 | McCormick & Co., Inc. | 111,212 | ||||||
| 1,470 | Mead Johnson Nutrition Co. | 124,256 | ||||||
| 2,252 | Molson Coors Brewing Co., Class B | 118,619 | ||||||
| 3,620 | Mondelez International, Inc., Class A | 121,369 | ||||||
| 1,397 | PepsiCo, Inc. | 118,026 | ||||||
| 1,328 | Philip Morris International, Inc. | 113,620 | ||||||
| 1,412 | Procter & Gamble Co. | 118,928 | ||||||
| 2,326 | Reynolds American, Inc. | 117,368 | ||||||
| 4,226 | Safeway, Inc. | 147,773 | ||||||
| 3,496 | Sysco Corp. | 117,563 | ||||||
| 3,783 | Tyson Foods, Inc., Class A | 119,895 | ||||||
| 2,267 | Walgreen Co. | 134,187 | ||||||
| 1,514 | Wal-Mart Stores, Inc. | 122,652 | ||||||
| 2,262 | Whole Foods Market, Inc. | 128,047 | ||||||
|
| |||||||
| 4,600,217 | ||||||||
|
| |||||||
| Energy – 9.3% |
| ||||||
| 1,106 | Anadarko Petroleum Corp. | 98,218 | ||||||
| 1,260 | Apache Corp. | 115,285 | ||||||
| 2,146 | Baker Hughes, Inc. | 122,228 | ||||||
| 2,568 | Cabot Oil & Gas Corp. | 88,476 | ||||||
| 1,791 | Cameron International Corp. * | 99,184 | ||||||
| 3,821 | Chesapeake Energy Corp. | 102,664 | ||||||
| 845 | Chevron Corp. | 103,455 | ||||||
| 1,511 | ConocoPhillips | 109,997 | ||||||
| 3,038 | Consol Energy, Inc. | 108,086 | ||||||
| 5,815 | Denbury Resources, Inc. * | 96,993 | ||||||
| 1,768 | Ensco PLC, Class A | 104,475 | ||||||
| 641 | EOG Resources, Inc. | 105,748 | ||||||
| 1,183 | EQT Corp. | 100,674 | ||||||
| 1,155 | Exxon Mobil Corp. | 108,013 | ||||||
| 1,837 | FMC Technologies, Inc. * | 88,336 | ||||||
| 2,061 | Halliburton Co. | 108,563 | ||||||
| 1,570 | Helmerich & Payne, Inc. | 120,874 | ||||||
See accompanying notes which are an integral part of these financial statements.
9
Cloud Capital Strategic Large Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Energy – (continued) |
| ||||||
| 1,323 | Hess Corp. | $ | 107,326 | |||||
| 2,742 | Kinder Morgan, Inc. | 97,452 | ||||||
| 3,020 | Marathon Oil Corp. | 108,824 | ||||||
| 1,340 | Marathon Petroleum Corp. | 110,856 | ||||||
| 1,519 | Murphy Oil Corp. | 98,627 | ||||||
| 6,339 | Nabors Industries Ltd. | 104,916 | ||||||
| 1,384 | National Oilwell Varco, Inc. | 112,795 | ||||||
| 4,209 | Newfield Exploration Co. * | 118,285 | ||||||
| 2,589 | Noble Corp. PLC | 98,704 | ||||||
| 1,594 | Noble Energy, Inc. | 111,949 | ||||||
| 1,146 | Occidental Petroleum Corp. | 108,871 | ||||||
| 1,713 | Phillips 66 | 119,212 | ||||||
| 575 | Pioneer Natural Resources Co. | 102,268 | ||||||
| 3,578 | QEP Resources, Inc. | 114,578 | ||||||
| 1,301 | Range Resources Corp. | 101,007 | ||||||
| 2,776 | Rowan Cos. PLC * | 96,105 | ||||||
| 1,229 | Schlumberger Ltd. | 108,669 | ||||||
| 2,605 | Southwestern Energy Co. * | 100,708 | ||||||
| 2,982 | Spectra Energy Corp. | 100,043 | ||||||
| 2,083 | Tesoro Corp. | 122,105 | ||||||
| 2,921 | Valero Energy Corp. | 133,571 | ||||||
| 2,793 | Williams Cos., Inc./The | 98,359 | ||||||
| 5,127 | WPX Energy, Inc. * | 95,319 | ||||||
|
| |||||||
| 4,251,818 | ||||||||
|
| |||||||
| Financials – 10.5% | |||||||
| 690 | ACE Ltd. | 70,931 | ||||||
| 1,038 | Aflac, Inc. | 68,910 | ||||||
| 1,252 | Allstate Corp./The | 67,925 | ||||||
| 834 | American Express Co. | 71,533 | ||||||
| 1,286 | American International Group, Inc. | 63,995 | ||||||
| 686 | Ameriprise Financial, Inc. | 74,246 | ||||||
| 898 | Aon PLC | 73,310 | ||||||
| 1,104 | Assurant, Inc. | 71,715 | ||||||
| 7,807 | Bank of America Corp. | 123,506 | ||||||
| 1,996 | Bank of New York Mellon Corp./The | 67,259 | ||||||
See accompanying notes which are an integral part of these financial statements.
10
Cloud Capital Strategic Large Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Financials – (continued) | |||||||
| 3,050 | BB&T Corp. | $ | 105,953 | |||||
| 532 | Berkshire Hathaway, Inc., Class B * | 62,007 | ||||||
| 226 | BlackRock, Inc. | 68,368 | ||||||
| 925 | Capital One Financial Corp. | 66,243 | ||||||
| 2,798 | CBRE Group, Inc. * | 67,829 | ||||||
| 2,801 | Charles Schwab Corp./The | 68,562 | ||||||
| 720 | Chubb Corp./The | 69,454 | ||||||
| 1,308 | Cincinnati Financial Corp. | 68,564 | ||||||
| 2,200 | Citigroup, Inc. | 116,398 | ||||||
| 860 | CME Group, Inc. | 70,477 | ||||||
| 2,656 | Comerica, Inc. | 120,455 | ||||||
| 1,231 | Discover Financial Services | 65,617 | ||||||
| 4,140 | E*Trade Financial Corp. * | 74,196 | ||||||
| 8,148 | Fifth Third Bancorp | 165,571 | ||||||
| 1,287 | Franklin Resources, Inc. | 71,285 | ||||||
| 4,940 | Genworth Financial, Inc., Class A * | 74,648 | ||||||
| 385 | Goldman Sachs Group, Inc./The | 65,104 | ||||||
| 1,986 | Hartford Financial Services Group, Inc. | 70,775 | ||||||
| 6,389 | Hudson City Bancorp, Inc. | 59,672 | ||||||
| 582 | IntercontinentalExchange Group, Inc. * | 124,166 | ||||||
| 1,957 | Invesco Ltd. | 68,215 | ||||||
| 2,959 | JPMorgan Chase & Co. | 169,299 | ||||||
| 5,028 | KeyCorp | 64,113 | ||||||
| 1,826 | Legg Mason, Inc. | 71,401 | ||||||
| 2,388 | Leucadia National Corp. | 68,432 | ||||||
| 1,390 | Lincoln National Corp. | 71,340 | ||||||
| 1,338 | Loews Corp. | 63,332 | ||||||
| 919 | M&T Bank Corp. | 106,044 | ||||||
| 1,454 | Marsh & McLennan Cos., Inc. | 68,976 | ||||||
| 1,020 | McGraw Hill Financial, Inc. * | 75,967 | ||||||
| 1,287 | MetLife, Inc. | 67,167 | ||||||
| 931 | Moody’s Corp. | 69,491 | ||||||
| 2,306 | Morgan Stanley | 72,189 | ||||||
| 1,995 | NASDAQ OMX Group, Inc./The | 78,369 | ||||||
| 1,087 | Northern Trust Corp. | 64,109 | ||||||
| 4,186 | People’s United Financial, Inc. | 63,372 | ||||||
See accompanying notes which are an integral part of these financial statements.
11
Cloud Capital Strategic Large Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Financials – (continued) | |||||||
| 826 | PNC Financial Services Group, Inc. | $ | 63,580 | |||||
| 1,442 | Principal Financial Group, Inc. | 73,013 | ||||||
| 2,405 | Progressive Corp./The | 67,184 | ||||||
| 788 | Prudential Financial, Inc. | 69,983 | ||||||
| 6,264 | Regions Financial Corp. | 60,948 | ||||||
| 2,479 | SLM Corp. | 66,061 | ||||||
| 883 | State Street Corp. | 64,112 | ||||||
| 2,177 | SunTrust Banks, Inc. | 78,876 | ||||||
| 856 | T. Rowe Price Group, Inc. | 68,911 | ||||||
| 867 | Torchmark Corp. | 65,865 | ||||||
| 764 | Travelers Cos., Inc./The | 69,330 | ||||||
| 2,907 | U.S. Bancorp | 114,007 | ||||||
| 2,040 | Unum Group | 68,480 | ||||||
| 2,613 | Wells Fargo & Co. | 115,021 | ||||||
| 2,017 | XL Group PLC | 64,516 | ||||||
| 2,087 | Zions Bancorp. | 61,210 | ||||||
|
| |||||||
| 4,821,587 | ||||||||
|
| |||||||
| Health Care – 12.7% | |||||||
| 2,966 | Abbott Laboratories | 113,257 | ||||||
| 2,365 | AbbVie, Inc. | 114,586 | ||||||
| 1,590 | Aetna, Inc. | 109,605 | ||||||
| 2,127 | Agilent Technologies, Inc. | 113,917 | ||||||
| 941 | Alexion Pharmaceuticals, Inc. * | 117,135 | ||||||
| 1,142 | Allergan, Inc. | 110,852 | ||||||
| 1,793 | AmerisourceBergen Corp. | 126,471 | ||||||
| 907 | Amgen, Inc. | 103,494 | ||||||
| 1,437 | Baxter International, Inc. | 98,384 | ||||||
| 1,038 | Becton, Dickinson and Co. | 112,692 | ||||||
| 483 | Biogen Idec, Inc. * | 140,520 | ||||||
| 9,082 | Boston Scientific Corp. * | 105,168 | ||||||
| 2,421 | Bristol-Myers Squibb Co. | 124,409 | ||||||
| 886 | C.R. Bard, Inc. | 122,984 | ||||||
| 2,018 | Cardinal Health, Inc. | 130,394 | ||||||
| 2,867 | CareFusion Corp. * | 114,245 | ||||||
| 716 | Celgene Corp. * | 115,836 | ||||||
See accompanying notes which are an integral part of these financial statements.
12
Cloud Capital Strategic Large Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Health Care – (continued) | |||||||
| 2,142 | Cerner Corp. * | $ | 123,098 | |||||
| 1,286 | CIGNA Corp. | 112,428 | ||||||
| 1,675 | Covidien PLC | 114,327 | ||||||
| 1,828 | DaVita, Inc. * | 108,885 | ||||||
| 2,420 | DENTSPLY International, Inc. | 115,100 | ||||||
| 1,982 | Eli Lilly & Co. | 99,513 | ||||||
| 1,560 | Express Scripts Holding Co. * | 105,082 | ||||||
| 2,370 | Forest Laboratories, Inc. * | 121,580 | ||||||
| 1,677 | Gilead Sciences, Inc. * | 125,429 | ||||||
| 2,536 | Hospira, Inc. * | 99,671 | ||||||
| 1,088 | Humana, Inc. | 113,095 | ||||||
| 1,178 | Johnson & Johnson | 111,486 | ||||||
| 1,054 | Laboratory Corp. of America Holdings * | 107,400 | ||||||
| 1,368 | Life Technologies Corp. * | 103,522 | ||||||
| 832 | McKesson Corp. | 138,064 | ||||||
| 1,948 | Medtronic, Inc. | 111,668 | ||||||
| 2,155 | Merck & Co., Inc. | 107,364 | ||||||
| 2,849 | Mylan, Inc. * | 125,731 | ||||||
| 2,516 | Patterson Companies, Inc. | 104,405 | ||||||
| 2,785 | PerkinElmer, Inc. | 105,929 | ||||||
| 858 | Perrigo Co. | 133,688 | ||||||
| 3,622 | Pfizer, Inc. | 114,912 | ||||||
| 1,729 | Quest Diagnostics, Inc. | 105,385 | ||||||
| 417 | Regeneron Pharmaceuticals, Inc. * | 122,676 | ||||||
| 1,950 | St. Jude Medical, Inc. | 113,919 | ||||||
| 1,490 | Stryker Corp. | 110,879 | ||||||
| 2,534 | Tenet Healthcare Corp. * | 109,331 | ||||||
| 1,118 | Thermo Fisher Scientific, Inc. | 112,798 | ||||||
| 1,413 | UnitedHealth Group, Inc. | 105,216 | ||||||
| 1,400 | Varian Medical Systems, Inc. * | 109,232 | ||||||
| 1,021 | Waters Corp. * | 101,626 | ||||||
| 1,183 | WellPoint, Inc. | 109,846 | ||||||
| 1,266 | Zimmer Holdings, Inc. | 115,724 | ||||||
| 3,427 | Zoetis, Inc. | 106,765 | ||||||
|
| |||||||
| 5,799,723 | ||||||||
|
| |||||||
See accompanying notes which are an integral part of these financial statements.
13
Cloud Capital Strategic Large Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Industrials – 10.3% | |||||||
| 626 | 3M Co. | $ | 83,618 | |||||
| 1,771 | ADT Corp./The | 71,820 | ||||||
| 1,609 | Avery Dennison Corp. | 78,669 | ||||||
| 677 | Boeing Co./The | 90,833 | ||||||
| 1,453 | Cintas Corp. | 80,635 | ||||||
| 2,827 | CSX Corp. | 77,095 | ||||||
| 571 | Cummins, Inc. | 75,545 | ||||||
| 1,063 | Danaher Corp. | 79,524 | ||||||
| 850 | Deere & Co. | 71,575 | ||||||
| 818 | Dover Corp. | 74,198 | ||||||
| 685 | Dun & Bradstreet Corp. | 80,032 | ||||||
| 1,076 | Eaton Corp. PLC | 78,147 | ||||||
| 1,154 | Emerson Electric Co. | 77,311 | ||||||
| 1,142 | Equifax, Inc. | 76,919 | ||||||
| 1,709 | Expeditors International of Washington, Inc. | 74,252 | ||||||
| 1,604 | Fastenal Co. | 74,618 | ||||||
| 635 | FedEx Corp. | 88,099 | ||||||
| 1,247 | Flowserve Corp. | 89,042 | ||||||
| 1,075 | Fluor Corp. | 83,678 | ||||||
| 843 | General Dynamics Corp. | 77,308 | ||||||
| 3,051 | General Electric Co. | 81,340 | ||||||
| 882 | Honeywell International, Inc. | 78,044 | ||||||
| 979 | Illinois Tool Works, Inc. | 77,936 | ||||||
| 1,170 | Ingersoll-Rand PLC | 83,572 | ||||||
| 2,680 | Iron Mountain, Inc. | 75,367 | ||||||
| 1,192 | Jacobs Engineering Group, Inc. * | 71,241 | ||||||
| 665 | Kansas City Southern | 80,441 | ||||||
| 771 | L-3 Communications Holdings, Inc. | 79,781 | ||||||
| 573 | Lockheed Martin Corp. | 81,218 | ||||||
| 3,705 | Masco Corp. | 83,060 | ||||||
| 2,067 | Nielsen Holdings NV | 89,223 | ||||||
| 967 | Norfolk Southern Corp. | 84,831 | ||||||
| 758 | Northrop Grumman Corp. | 85,420 | ||||||
| 1,304 | PACCAR, Inc. | 74,757 | ||||||
| 1,012 | Pall Corp. | 84,695 | ||||||
| 699 | Parker Hannifin Corp. | 82,320 | ||||||
See accompanying notes which are an integral part of these financial statements.
14
Cloud Capital Strategic Large Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Industrials – (continued) | |||||||
| 1,157 | Pentair, Inc. | $ | 81,838 | |||||
| 4,263 | Pitney Bowes, Inc. | 98,771 | ||||||
| 329 | Precision Castparts Corp. | 84,974 | ||||||
| 2,649 | Quanta Services, Inc. * | 78,447 | ||||||
| 931 | Raytheon Co. | 82,578 | ||||||
| 2,135 | Republic Services, Inc. | 74,543 | ||||||
| 1,948 | Robert Half International, Inc. | 75,247 | ||||||
| 721 | Rockwell Automation, Inc. | 81,945 | ||||||
| 999 | Rockwell Collins, Inc. | 72,626 | ||||||
| 570 | Roper Industries, Inc. | 73,929 | ||||||
| 1,221 | Ryder System, Inc. | 85,248 | ||||||
| 751 | Snap-on, Inc. | 79,696 | ||||||
| 5,407 | Southwest Airlines Co. | 100,518 | ||||||
| 825 | Stanley Black & Decker, Inc. | 67,148 | ||||||
| 618 | Stericycle, Inc. * | 72,586 | ||||||
| 2,558 | Textron, Inc. | 85,001 | ||||||
| 2,116 | Tyco International Ltd. | 80,695 | ||||||
| 459 | Union Pacific Corp. | 74,305 | ||||||
| 674 | United Parcel Service, Inc. (UPS), Class B | 69,008 | ||||||
| 700 | United Technologies Corp. | 77,641 | ||||||
| 280 | W.W. Grainger, Inc. | 72,205 | ||||||
| 1,716 | Waste Management, Inc. | 78,375 | ||||||
| 2,923 | Xylem, Inc. | 101,031 | ||||||
|
| |||||||
| 4,724,519 | ||||||||
|
| |||||||
| Information Technology – 10.4% | |||||||
| 1,013 | Accenture PLC, Class A | 78,501 | ||||||
| 1,602 | Adobe Systems, Inc. * | 90,983 | ||||||
| 20,596 | Advanced Micro Devices, Inc. * | 74,969 | ||||||
| 1,595 | Akamai Technologies, Inc. * | 71,330 | ||||||
| 963 | Amphenol Corp., Class A | 81,848 | ||||||
| 1,578 | Analog Devices, Inc. | 76,084 | ||||||
| 147 | Apple, Inc. | 81,657 | ||||||
| 4,793 | Applied Materials, Inc. | 82,917 | ||||||
| 1,930 | Autodesk, Inc. * | 87,351 | ||||||
| 1,036 | Automatic Data Processing, Inc. | 82,904 | ||||||
See accompanying notes which are an integral part of these financial statements.
15
Cloud Capital Strategic Large Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Information Technology – (continued) | |||||||
| 2,529 | CA, Inc. | $ | 83,443 | |||||
| 3,151 | Cisco Systems, Inc. | 66,954 | ||||||
| 1,015 | Cognizant Technology Solutions Corp., Class A * | 95,263 | ||||||
| 1,452 | Computer Sciences Corp. | 76,406 | ||||||
| 5,064 | Corning, Inc. | 86,490 | ||||||
| 1,435 | eBay, Inc. * | 72,503 | ||||||
| 2,677 | Electronic Arts, Inc. * | 59,366 | ||||||
| 1,634 | Fidelity National Information Services, Inc. | 82,826 | ||||||
| 1,929 | First Solar, Inc. * | 115,418 | ||||||
| 749 | Fiserv, Inc. * | 82,344 | ||||||
| 2,310 | FLIR Systems, Inc. | 68,531 | ||||||
| 85 | Google, Inc., Class A * | 90,464 | ||||||
| 1,308 | Harris Corp. | 84,382 | ||||||
| 3,324 | Hewlett-Packard Co. | 90,911 | ||||||
| 3,352 | Intel Corp. | 79,910 | ||||||
| 1,162 | Intuit, Inc. | 86,247 | ||||||
| 3,172 | Jabil Circuit, Inc. | 64,301 | ||||||
| 3,807 | Juniper Networks, Inc. * | 77,164 | ||||||
| 1,335 | KLA-Tencor Corp. | 85,249 | ||||||
| 1,544 | Lam Research Corp. * | 80,468 | ||||||
| 1,923 | Linear Technology Corp. | 81,811 | ||||||
| 9,919 | LSI Corp. | 80,045 | ||||||
| 120 | MasterCard, Inc., Class A | 91,443 | ||||||
| 1,922 | Microchip Technology, Inc. | 83,198 | ||||||
| 5,386 | Micron Technology, Inc. * | 113,643 | ||||||
| 2,197 | Microsoft Corp. | 83,755 | ||||||
| 2,490 | Molex, Inc. | 96,222 | ||||||
| 1,319 | Motorola Solutions, Inc. | 86,907 | ||||||
| 1,777 | NetApp, Inc. | 73,295 | ||||||
| 4,973 | NVIDIA Corp. | 77,578 | ||||||
| 2,302 | Oracle Corp. | 81,247 | ||||||
| 1,909 | Paychex, Inc. | 83,489 | ||||||
| 1,113 | QUALCOMM, Inc. | 81,885 | ||||||
| 1,705 | Salesforce.com, Inc. * | 88,806 | ||||||
| 1,323 | SanDisk Corp. | 90,167 | ||||||
| 714 | Science Applications International Corp. | 26,320 | ||||||
See accompanying notes which are an integral part of these financial statements.
16
Cloud Capital Strategic Large Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Information Technology – (continued) | |||||||
| 1,859 | Seagate Technology PLC | $ | 91,163 | |||||
| 2,844 | Symantec Corp. | 63,961 | ||||||
| 1,495 | TE Connectivity Ltd. | 78,798 | ||||||
| 4,731 | Teradyne, Inc. * | 80,571 | ||||||
| 1,909 | Texas Instruments, Inc. | 82,084 | ||||||
| 2,654 | Total System Services, Inc. | 82,422 | ||||||
| 1,495 | VeriSign, Inc. * | 84,994 | ||||||
| 421 | Visa, Inc., Class A | 85,589 | ||||||
| 1,148 | Western Digital Corp. | 86,138 | ||||||
| 7,464 | Xerox Corp. | 84,942 | ||||||
| 1,699 | Xilinx, Inc. | 75,488 | ||||||
| 2,660 | Yahoo!, Inc. * | 98,349 | ||||||
|
| |||||||
| 4,751,494 | ||||||||
|
| |||||||
| Materials – 9.9% | |||||||
| 1,431 | Air Products & Chemicals, Inc. | 155,737 | ||||||
| 1,438 | Airgas, Inc. | 156,175 | ||||||
| 18,457 | Alcoa, Inc. | 177,371 | ||||||
| 5,408 | Allegheny Technologies, Inc. | 179,663 | ||||||
| 3,242 | Ball Corp. | 162,054 | ||||||
| 3,574 | Bemis Co., Inc. | 139,478 | ||||||
| 749 | CF Industries Holdings, Inc. | 162,766 | ||||||
| 3,824 | Dow Chemical Co./The | 149,350 | ||||||
| 1,856 | Eastman Chemical Co. | 142,951 | ||||||
| 1,592 | Ecolab, Inc. | 170,664 | ||||||
| 2,543 | EI du Pont de Nemours & Co. | 156,111 | ||||||
| 2,205 | FMC Corp. | 160,681 | ||||||
| 4,711 | Freeport-McMoRan Copper & Gold, Inc., Class B | 163,408 | ||||||
| 1,813 | International Flavors & Fragrances, Inc. | 160,144 | ||||||
| 3,158 | International Paper Co. | 147,318 | ||||||
| 2,091 | Lyondellbasell Industries NV, Class A | 161,361 | ||||||
| 4,065 | MeadWestvaco Corp. | 142,736 | ||||||
| 1,500 | Monsanto Co. | 169,952 | ||||||
| 3,461 | Mosaic Co./The | 165,786 | ||||||
| 3,191 | Nucor Corp. | 162,909 | ||||||
| 4,826 | Owens-Illinois, Inc. * | 159,262 | ||||||
See accompanying notes which are an integral part of these financial statements.
17
Cloud Capital Strategic Large Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Materials – (continued) | |||||||
| 921 | PPG Industries, Inc. | $ | 169,526 | |||||
| 1,250 | Praxair, Inc. | 157,781 | ||||||
| 4,996 | Sealed Air Corp. | 160,409 | ||||||
| 859 | Sherwin-Williams Co./The | 157,233 | ||||||
| 1,763 | Sigma-Aldrich Corp. | 152,082 | ||||||
| 7,850 | United States Steel Corp. | 210,459 | ||||||
| 3,046 | Vulcan Materials Co. | 171,708 | ||||||
|
| |||||||
| 4,525,075 | ||||||||
|
| |||||||
| Real Estate Investment Trusts – 1.0% | |||||||
| 435 | American Tower Corp., Class A | 33,867 | ||||||
| 1,087 | Apartment Investment & Management Co., Class A | 27,297 | ||||||
| 290 | Boston Properties, Inc. | 28,822 | ||||||
| 744 | HCP, Inc. | 27,349 | ||||||
| 492 | Health Care REIT, Inc. | 27,553 | ||||||
| 1,735 | Host Hotels & Resorts, Inc. | 31,945 | ||||||
| 1,486 | Kimco Realty Corp. | 30,641 | ||||||
| 1,089 | Macerich Co./The | 62,013 | ||||||
| 679 | Plum Creek Timber Co., Inc. | 29,717 | ||||||
| 832 | ProLogis, Inc. | 31,574 | ||||||
| 195 | Public Storage, Inc. | 29,751 | ||||||
| 203 | Simon Property Group, Inc. | 30,367 | ||||||
| 484 | Ventas, Inc. | 27,504 | ||||||
| 363 | Vornado Realty Trust | 31,895 | ||||||
| 1,065 | Weyerhaeuser Co. | 32,075 | ||||||
|
| |||||||
| 482,370 | ||||||||
|
| |||||||
| Telecommunication Services – 0.4% | |||||||
| 1,112 | AT&T, Inc. | 39,145 | ||||||
| 542 | Crown Castle International Corp.* | 40,260 | ||||||
| 5,382 | Sprint Corp. * | 45,155 | ||||||
| 1,569 | T-Mobile US, Inc. * | 40,821 | ||||||
| 807 | Verizon Communications, Inc. | 40,061 | ||||||
|
| |||||||
| 205,442 | ||||||||
|
| |||||||
See accompanying notes which are an integral part of these financial statements.
18
Cloud Capital Strategic Large Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Utilities – 4.0% | |||||||
| 5,609 | AES Corp./The | $ | 81,724 | |||||
| 1,600 | AGL Resources, Inc. | 74,469 | ||||||
| 2,171 | Ameren Corp. | 77,846 | ||||||
| 1,713 | American Electric Power Co., Inc. | 80,613 | ||||||
| 3,177 | CenterPoint Energy, Inc. | 74,427 | ||||||
| 2,735 | CMS Energy Corp. | 72,599 | ||||||
| 1,251 | Dominion Resources, Inc., Class A | 81,190 | ||||||
| 1,093 | DTE Energy Co. | 72,949 | ||||||
| 1,125 | Duke Energy Corp. | 78,696 | ||||||
| 1,576 | Edison International | 72,829 | ||||||
| 1,286 | Integrys Energy Group, Inc. | 69,097 | ||||||
| 907 | NextEra Energy, Inc. | 76,738 | ||||||
| 2,483 | NiSource, Inc. | 78,506 | ||||||
| 1,780 | Northeast Utilities | 73,113 | ||||||
| 2,799 | NRG Energy, Inc. | 74,058 | ||||||
| 1,407 | Oneok, Inc. | 81,730 | ||||||
| 3,876 | Pepco Holdings, Inc. | 73,951 | ||||||
| 1,352 | Pinnacle West Capital Corp. | 72,158 | ||||||
| 2,400 | PPL Corp. | 73,709 | ||||||
| 2,261 | Public Service Enterprise Group, Inc. | 73,910 | ||||||
| 1,511 | SCANA Corp. | 71,279 | ||||||
| 876 | Sempra Energy | 77,503 | ||||||
| 1,782 | Wisconsin Energy Corp. | 74,429 | ||||||
| 2,649 | Xcel Energy, Inc. | 74,212 | ||||||
|
| |||||||
| 1,811,735 | ||||||||
|
| |||||||
| TOTAL COMMON STOCKS (Cost $32,181,275) | 40,824,445 | ||||||
|
| |||||||
See accompanying notes which are an integral part of these financial statements.
19
Cloud Capital Strategic Large Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Cash Equivalents – 4.7% | |||||||
| 1,400 | FOLIOfn Investment Cash Account, 0.010% (a) | $ | 1,400 | |||||
| 2,134,544 | FOLIOfn Investment Sweep Account, 0.010% (a) | 2,134,544 | ||||||
|
| |||||||
| TOTAL CASH EQUIVALENTS (Cost $2,135,944) | 2,135,944 | ||||||
|
| |||||||
| TOTAL INVESTMENTS (Cost $34,317,219) – 93.8% | 42,960,389 | ||||||
|
| |||||||
| Other Assets in Excess of Liabilities – 6.2% | 2,840,227 | ||||||
|
| |||||||
| NET ASSETS – 100.0% | $ | 45,800,616 | |||||
|
| |||||||
| (a) | Rate disclosed is the seven day yield as of November 30, 2013. |
| * | Non-income producing security. |
See accompanying notes which are an integral part of these financial statements.
20
Cloud Capital Strategic Mid Cap Fund
Schedule of Investments
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Common Stocks – 91.4% | |||||||
| Consumer Discretionary – 10.3% | |||||||
| 1,369 | Aaron’s, Inc. | $ | 39,212 | |||||
| 459 | Advance Auto Parts, Inc. | 46,360 | ||||||
| 4,298 | Aeropostale, Inc. * | 44,355 | ||||||
| 595 | AMC Networks, Inc., Class A * | 38,198 | ||||||
| 2,613 | American Eagle Outfitters, Inc. | 42,519 | ||||||
| 1,107 | ANN, Inc. * | 39,499 | ||||||
| 2,036 | Apollo Group, Inc., Class A * | 53,537 | ||||||
| 2,309 | Ascena Retail Group, Inc. * | 49,189 | ||||||
| 521 | Bally Technologies, Inc. * | 38,871 | ||||||
| 2,641 | Barnes & Noble, Inc. * | 44,324 | ||||||
| 1,126 | Big Lots, Inc. * | 43,149 | ||||||
| 745 | Bob Evans Farms, Inc. | 41,421 | ||||||
| 924 | Brinker International, Inc. | 43,440 | ||||||
| 572 | Cabela’s, Inc., Class A * | 35,034 | ||||||
| 533 | Carter’s, Inc. | 37,650 | ||||||
| 893 | Cheesecake Factory, Inc./The | 43,556 | ||||||
| 2,451 | Chico’s FAS, Inc. | 45,816 | ||||||
| 1,253 | Cinemark Holdings, Inc. | 41,332 | ||||||
| 1,265 | CST Brands, Inc. | 41,596 | ||||||
| 642 | Deckers Outdoor Corp. * | 53,065 | ||||||
| 1,292 | DeVry, Inc. | 45,928 | ||||||
| 823 | Dick’s Sporting Goods, Inc. | 46,530 | ||||||
| 3 | Dillard’s, Inc., Class A | 275 | ||||||
| 622 | Domino’s Pizza, Inc. | 42,998 | ||||||
| 1,266 | DreamWorks Animation SKG, Inc., Class A * | 40,333 | ||||||
| 1,164 | Foot Locker, Inc. | 45,280 | ||||||
| 1,639 | Gentex Corp. | 48,872 | ||||||
| 1,361 | Guess?, Inc. | 46,631 | ||||||
| 621 | Hanesbrands, Inc. | 43,506 | ||||||
| 666 | HSN, Inc. | 38,211 | ||||||
| 1,178 | International Speedway Corp., Class A | 40,426 | ||||||
| 843 | Jarden Corp. * | 47,428 | ||||||
| 757 | John Wiley & Sons, Inc., Class A | 38,554 | ||||||
| 2,305 | KB Home | 40,399 | ||||||
See accompanying notes which are an integral part of these financial statements.
21
Cloud Capital Strategic Mid Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Consumer Discretionary – (continued) | |||||||
| 873 | Lamar Advertising Co. * | $ | 43,555 | |||||
| 734 | Life Time Fitness, Inc. * | 35,601 | ||||||
| 1,276 | LKQ Corp. * | 42,300 | ||||||
| 976 | Matthews International Corp., Class A | 41,154 | ||||||
| 1,290 | MDC Holdings, Inc. | 38,987 | ||||||
| 849 | Meredith Corp. | 45,289 | ||||||
| 306 | Mohawk Industries, Inc. * | 42,894 | ||||||
| 3,228 | New York Times Co./The, Class A | 45,069 | ||||||
| 43 | NVR, Inc. * | 42,067 | ||||||
| 9,111 | Office Depot, Inc. * | 49,566 | ||||||
| 225 | Panera Bread Co., Class A * | 39,827 | ||||||
| 337 | Polaris Industries, Inc. | 44,935 | ||||||
| 2,234 | Regis Corp. | 35,729 | ||||||
| 1,002 | Rent-A-Center, Inc. | 34,142 | ||||||
| 1,250 | Scholastic Corp. | 38,184 | ||||||
| 2,540 | Scientific Games Corp., Class A * | 45,594 | ||||||
| 2,036 | Service Corporation International | 36,788 | ||||||
| 539 | Signet Jewelers Ltd. | 41,434 | ||||||
| 831 | Sotheby’s | 42,595 | ||||||
| 924 | Strayer Education, Inc. | 34,309 | ||||||
| 994 | Tempur Sealy International, Inc. * | 50,720 | ||||||
| 751 | Thor Industries, Inc. | 40,585 | ||||||
| 1,211 | Toll Brothers, Inc. * | 41,281 | ||||||
| 635 | Tractor Supply Co. | 46,459 | ||||||
| 457 | Tupperware Brands Corp. | 41,721 | ||||||
| 516 | Under Armour, Inc., Class A * | 41,655 | ||||||
| 1,345 | Valassis Communications, Inc. | 39,499 | ||||||
| 4,818 | Wendy’s Co./The | 41,481 | ||||||
| 643 | Williams-Sonoma, Inc. | 38,040 | ||||||
|
| |||||||
| 2,628,954 | ||||||||
|
| |||||||
| Consumer Staples – 10.4% | |||||||
| 2,743 | Church & Dwight Co., Inc. | 178,980 | ||||||
| 9,254 | Dean Foods Co.* | 166,391 | ||||||
| 1,850 | Energizer Holdings, Inc. | 204,148 | ||||||
| 7,216 | Flowers Foods, Inc. | 156,808 | ||||||
See accompanying notes which are an integral part of these financial statements.
22
Cloud Capital Strategic Mid Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Consumer Staples – (continued) | |||||||
| 2,720 | Green Mountain Coffee Roasters, Inc.* | $ | 183,283 | |||||
| 3,471 | Harris Teeter Supermarkets, Inc. | 171,415 | ||||||
| 5,437 | Hillshire Brands Co. | 181,702 | ||||||
| 2,529 | Ingredion, Inc. | 174,898 | ||||||
| 2,020 | Lancaster Colony Corp. | 175,094 | ||||||
| 4,250 | Post Holdings, Inc. * | 215,252 | ||||||
| 23,767 | SUPERVALU, Inc. * | 153,295 | ||||||
| 5,436 | Tootsie Roll Industries, Inc. | 174,218 | ||||||
| 2,385 | United Natural Foods, Inc. * | 164,241 | ||||||
| 3,293 | Universal Corp. | 171,757 | ||||||
| 8,871 | WhiteWave Food Co., Class A * | 188,686 | ||||||
|
| |||||||
| 2,660,168 | ||||||||
|
| |||||||
| Energy – 9.6% | |||||||
| 17,951 | Alpha Natural Resources, Inc. * | 119,911 | ||||||
| 24,141 | Arch Coal, Inc. | 98,494 | ||||||
| 2,027 | Atwood Oceanics, Inc. * | 106,524 | ||||||
| 5,364 | Bill Barrett Corp. * | 144,229 | ||||||
| 1,357 | CARBO Ceramics, Inc. | 166,992 | ||||||
| 1,401 | Cimarex Energy Co. | 132,494 | ||||||
| 1,859 | Dresser-Rand Group, Inc. * | 104,950 | ||||||
| 1,107 | Dril-Quip, Inc. * | 120,146 | ||||||
| 1,696 | Energen Corp. | 122,394 | ||||||
| 4,435 | Helix Energy Solutions Group, Inc. * | 98,499 | ||||||
| 2,557 | HollyFrontier Corp. | 122,665 | ||||||
| 1,436 | Oceaneering International, Inc. | 110,845 | ||||||
| 1,269 | Oil States International, Inc. * | 129,905 | ||||||
| 5,771 | Patterson-UTI Energy, Inc. | 134,516 | ||||||
| 2,522 | Rosetta Resources, Inc. * | 127,558 | ||||||
| 1,680 | SM Energy Co. | 148,080 | ||||||
| 4,492 | Superior Energy Services, Inc. * | 114,451 | ||||||
| 2,087 | Tidewater, Inc. | 119,016 | ||||||
| 2,473 | Unit Corp. * | 119,110 | ||||||
| 2,998 | World Fuel Services Corp. | 115,131 | ||||||
|
| |||||||
| 2,455,910 | ||||||||
|
| |||||||
See accompanying notes which are an integral part of these financial statements.
23
Cloud Capital Strategic Mid Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Financials – 8.1% | |||||||
| 190 | Affiliated Managers Group, Inc. * | $ | 38,127 | |||||
| 446 | Alexander & Baldwin, Inc. | 16,866 | ||||||
| 86 | Alleghany Corp. * | 33,912 | ||||||
| 654 | American Financial Group, Inc. | 37,719 | ||||||
| 4,375 | Apollo Investment Corp. | 39,462 | ||||||
| 805 | Arthur J Gallagher & Co. | 37,481 | ||||||
| 948 | Aspen Insurance Holdings Ltd. | 38,324 | ||||||
| 2,025 | Associated Banc-Corp. | 34,903 | ||||||
| 2,664 | Astoria Financial Corp. | 37,244 | ||||||
| 1,669 | BancorpSouth, Inc. | 39,907 | ||||||
| 628 | Bank of Hawaii Corp. | 37,127 | ||||||
| 1,055 | Brown & Brown, Inc. | 33,370 | ||||||
| 1,436 | Cathay General Bancorp | 39,677 | ||||||
| 700 | CBOE Holdings, Inc. | 36,586 | ||||||
| 493 | City National Corp. | 37,636 | ||||||
| 795 | Commerce Bancshares, Inc. | 35,851 | ||||||
| 457 | Cullen/Frost Bankers, Inc. | 32,804 | ||||||
| 1,106 | East West Bancorp, Inc. | 37,897 | ||||||
| 855 | Eaton Vance Corp. | 35,753 | ||||||
| 124 | Everest Re Group Ltd. | 19,453 | ||||||
| 1,213 | Federated Investors, Inc., Class B | 33,109 | ||||||
| 1,398 | Fidelity National Financial, Inc., Class A | 40,628 | ||||||
| 1,590 | First American Financial Corp. | 42,074 | ||||||
| 2,947 | First Horizon National Corp. | 33,035 | ||||||
| 3,244 | First Niagara Financial Group, Inc. | 36,140 | ||||||
| 1,527 | FirstMerit Corp. | 35,071 | ||||||
| 2,745 | Fulton Financial Corp. | 35,884 | ||||||
| 680 | Greenhill & Co., Inc. | 37,196 | ||||||
| 1,039 | Hancock Holding Co. | 36,559 | ||||||
| 616 | Hanover Insurance Group, Inc. | 37,139 | ||||||
| 786 | HCC Insurance Holdings, Inc. | 36,132 | ||||||
| 1,445 | International Bancshares Corp. | 37,709 | ||||||
| 3,901 | Janus Capital Group, Inc. | 42,439 | ||||||
| 405 | Jones Lang LaSalle, Inc. | 39,529 | ||||||
| 990 | Kemper Corp. | 37,138 | ||||||
| 792 | Mercury General Corp. | 38,075 | ||||||
See accompanying notes which are an integral part of these financial statements.
24
Cloud Capital Strategic Mid Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Financials – (continued) | |||||||
| 881 | MSCI, Inc., Class A * | $ | 39,127 | |||||
| 2,262 | New York Community Bancorp, Inc. * | 37,372 | ||||||
| 2,338 | Old Republic International Corp. | 40,207 | ||||||
| 879 | Primerica, Inc. | 37,811 | ||||||
| 556 | Prosperity Bancshares, Inc. | 35,666 | ||||||
| 789 | Protective Life Corp. | 37,848 | ||||||
| 813 | Raymond James Financial, Inc. | 39,169 | ||||||
| 521 | Reinsurance Group of America, Inc. | 39,085 | ||||||
| 1,085 | SEI Investments Co. | 36,428 | ||||||
| 374 | Signature Bank * | 39,703 | ||||||
| 621 | StanCorp Financial Group, Inc. | 39,827 | ||||||
| 387 | SVB Financial Group * | 39,215 | ||||||
| 10,005 | Synovus Financial Corp. | 34,916 | ||||||
| 2,322 | TCF Financial Corp. | 36,391 | ||||||
| 1,291 | Trustmark Corp. | 36,201 | ||||||
| 3,328 | Valley National Bancorp | 33,780 | ||||||
| 685 | Waddell & Reed Financial, Inc., Class A | 43,674 | ||||||
| 1,510 | Washington Federal, Inc. | 35,319 | ||||||
| 1,258 | Webster Financial Corp. | 37,099 | ||||||
| 636 | Westamerica Bancorp | 35,228 | ||||||
| 816 | WR Berkley Corp. | 35,724 | ||||||
|
| |||||||
| 2,087,746 | ||||||||
|
| |||||||
| Health Care – 10.5% | |||||||
| 5,353 | Allscripts Healthcare Solutions, Inc. * | 79,979 | ||||||
| 654 | Bio-Rad Laboratories, Inc., Class A * | 80,181 | ||||||
| 1,690 | Charles River Laboratories International, Inc. * | 88,193 | ||||||
| 1,881 | Community Health Systems, Inc. | 77,579 | ||||||
| 629 | Cooper Cos., Inc./The | 82,904 | ||||||
| 900 | Covance, Inc. * | 75,945 | ||||||
| 1,802 | Endo Health Solutions, Inc. * | 121,099 | ||||||
| 6,227 | Health Management Associates, Inc. * | 81,508 | ||||||
| 2,603 | Health Net, Inc. * | 79,536 | ||||||
| 717 | Henry Schein, Inc. * | 81,750 | ||||||
| 2,058 | Hill-Rom Holdings, Inc. | 85,207 | ||||||
| 3,753 | HMS Holdings Corp. * | 85,973 | ||||||
See accompanying notes which are an integral part of these financial statements.
25
Cloud Capital Strategic Mid Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Health Care – (continued) | |||||||
| 3,584 | Hologic, Inc. * | $ | 80,255 | |||||
| 753 | IDEXX Laboratories, Inc. * | 78,463 | ||||||
| 1,637 | LifePoint Hospitals, Inc. * | 83,853 | ||||||
| 1,895 | Mallinckrodt PLC * | 98,464 | ||||||
| 2,822 | Masimo Corp. * | 80,786 | ||||||
| 744 | Mednax, Inc. * | 82,483 | ||||||
| 322 | Mettler-Toledo International, Inc. * | 79,437 | ||||||
| 1,403 | Omnicare, Inc. | 80,378 | ||||||
| 10 | Orthofix International NV * | 216 | ||||||
| 2,140 | Owens & Minor, Inc. | 81,686 | ||||||
| 1,416 | ResMed, Inc. | 69,102 | ||||||
| 1,109 | Salix Pharmaceuticals Ltd. * | 94,025 | ||||||
| 1,740 | STERIS Corp. | 80,283 | ||||||
| 923 | Techne Corp. | 78,995 | ||||||
| 928 | Teleflex, Inc. | 91,188 | ||||||
| 2,038 | Thoratec Corp. * | 80,237 | ||||||
| 977 | United Therapeutics Corp. * | 90,151 | ||||||
| 1,037 | Universal Health Services, Inc., Class B | 85,510 | ||||||
| 2,910 | VCA Antech, Inc. * | 87,153 | ||||||
| 1,077 | Vertex Pharmaceuticals, Inc. * | 74,772 | ||||||
| 1,138 | WellCare Health Plans, Inc. * | 84,531 | ||||||
|
| |||||||
| 2,681,822 | ||||||||
|
| |||||||
| Industrials – 10.4% | |||||||
| 430 | Acuity Brands, Inc. | 44,063 | ||||||
| 1,234 | AECOM Technology Corp. * | 35,848 | ||||||
| 644 | AGCO Corp. | 37,555 | ||||||
| 624 | Alaska Air Group, Inc. | 48,530 | ||||||
| 372 | Alliant Techsystems, Inc. | 45,124 | ||||||
| 850 | AMETEK, Inc. | 41,858 | ||||||
| 538 | BE Aerospace, Inc. * | 46,808 | ||||||
| 1,369 | Brink’s Co./The | 45,904 | ||||||
| 547 | Carlisle Cos., Inc. | 40,236 | ||||||
| 674 | CLARCOR, Inc. | 40,774 | ||||||
| 657 | Clean Harbors, Inc. * | 34,665 | ||||||
| 847 | Con-way, Inc. | 35,059 | ||||||
See accompanying notes which are an integral part of these financial statements.
26
Cloud Capital Strategic Mid Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Industrials – (continued) | |||||||
| 1,138 | Copart, Inc. * | $ | 39,189 | |||||
| 553 | Corporate Executive Board Co./The * | 40,692 | ||||||
| 1,018 | Corrections Corp. of America | 33,942 | ||||||
| 626 | Crane Co. | 38,999 | ||||||
| 882 | Deluxe Corp. | 43,828 | ||||||
| 1,022 | Donaldson Co., Inc. | 42,640 | ||||||
| 462 | Esterline Technologies Corp. * | 40,706 | ||||||
| 2,405 | Exelis, Inc. | 42,490 | ||||||
| 980 | Fortune Brands Home & Security, Inc. | 42,743 | ||||||
| 1,073 | FTI Consulting, Inc. * | 48,203 | ||||||
| 826 | GATX Corp. | 41,421 | ||||||
| 1,206 | General Cable Corp. | 35,141 | ||||||
| 420 | Genesee & Wyoming, Inc., Class A * | 40,367 | ||||||
| 521 | Graco, Inc. | 40,232 | ||||||
| 1,270 | Granite Construction, Inc. | 39,683 | ||||||
| 1,571 | Harsco Corp. | 41,090 | ||||||
| 1,366 | Herman Miller, Inc. | 43,575 | ||||||
| 1,026 | HNI Corp. | 40,652 | ||||||
| 359 | Hubbell, Inc., Class B | 38,785 | ||||||
| 569 | Huntington Ingalls Industries, Inc. | 46,822 | ||||||
| 613 | IDEX Corp. | 43,750 | ||||||
| 1,098 | ITT Corp. | 44,803 | ||||||
| 502 | JB Hunt Transport Services, Inc. | 37,770 | ||||||
| 1,220 | KBR, Inc. | 41,283 | ||||||
| 854 | Kennametal, Inc. | 40,559 | ||||||
| 442 | Kirby Corp. * | 41,760 | ||||||
| 660 | Landstar System, Inc. | 37,044 | ||||||
| 540 | Lennox International, Inc. | 44,487 | ||||||
| 600 | Lincoln Electric Holdings, Inc. | 42,872 | ||||||
| 561 | Manpower, Inc. | 44,838 | ||||||
| 1,297 | Matson, Inc. | 32,452 | ||||||
| 732 | Mine Safety Appliances Co. | 36,451 | ||||||
| 480 | MSC Industrial Direct Co., Inc., Class A | 36,902 | ||||||
| 541 | Nordson Corp. | 38,981 | ||||||
| 802 | Oshkosh Corp. | 39,082 | ||||||
| 2,182 | R.R. Donnelley & Sons Co. | 40,359 | ||||||
See accompanying notes which are an integral part of these financial statements.
27
Cloud Capital Strategic Mid Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Industrials – (continued) | |||||||
| 569 | Regal-Beloit Corp. | $ | 41,871 | |||||
| 1,487 | Rollins, Inc. | 41,824 | ||||||
| 498 | SPX Corp. | 47,098 | ||||||
| 1,216 | Terex Corp. * | 44,147 | ||||||
| 642 | Timken Co. | 33,247 | ||||||
| 447 | Towers Watson & Co., Class A | 50,330 | ||||||
| 865 | Trinity Industries, Inc. | 44,902 | ||||||
| 492 | Triumph Group, Inc. | 36,378 | ||||||
| 659 | United Rentals, Inc. * | 45,306 | ||||||
| 746 | URS Corp. | 38,771 | ||||||
| 2,171 | UTi Worldwide, Inc. | 34,325 | ||||||
| 267 | Valmont Industries, Inc. | 38,613 | ||||||
| 634 | Wabtec Corp. | 43,740 | ||||||
| 934 | Waste Connections, Inc. | 41,044 | ||||||
| 415 | Watsco, Inc. | 39,788 | ||||||
| 1,583 | Werner Enterprises, Inc. | 38,091 | ||||||
| 928 | Woodward, Inc. | 39,832 | ||||||
|
| |||||||
| 2,660,324 | ||||||||
|
| |||||||
| Information Technology – 10.1% | |||||||
| 670 | 3D Systems Corp. * | 50,369 | ||||||
| 709 | ACI Worldwide, Inc. * | 45,722 | ||||||
| 1,380 | Acxiom Corp. * | 45,911 | ||||||
| 1,415 | ADTRAN, Inc. | 36,338 | ||||||
| 1,215 | Advent Software, Inc. | 42,721 | ||||||
| 174 | Alliance Data Systems Corp. * | 42,232 | ||||||
| 407 | ANSYS, Inc. * | 34,900 | ||||||
| 1,016 | AOL, Inc. * | 45,294 | ||||||
| 748 | Arrow Electronics, Inc. * | 38,384 | ||||||
| 4,699 | Atmel Corp. * | 35,947 | ||||||
| 894 | Avnet, Inc. | 35,673 | ||||||
| 1,137 | Broadridge Financial Solutions, Inc. | 43,366 | ||||||
| 2,506 | Cadence Design Systems, Inc. * | 33,208 | ||||||
| 1,641 | Ciena Corp. * | 36,452 | ||||||
| 407 | CommVault Systems, Inc. * | 30,495 | ||||||
| 3,225 | Compuware Corp. | 35,440 | ||||||
See accompanying notes which are an integral part of these financial statements.
28
Cloud Capital Strategic Mid Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Information Technology – (continued) | |||||||
| 352 | Concur Technologies, Inc. * | $ | 34,137 | |||||
| 1,893 | Convergys Corp. | 38,846 | ||||||
| 1,302 | CoreLogic, Inc. * | 45,870 | ||||||
| 616 | Cree, Inc. * | 34,356 | ||||||
| 3,012 | Cypress Semiconductor Corp. | 29,189 | ||||||
| 1,191 | Diebold, Inc. | 40,635 | ||||||
| 480 | DST Systems, Inc. | 42,355 | ||||||
| 208 | Equinix, Inc. * | 33,347 | ||||||
| 331 | Factset Research Systems, Inc. | 37,382 | ||||||
| 666 | Fair Isaac Corp. | 39,318 | ||||||
| 2,853 | Fairchild Semiconductor International, Inc. * | 36,313 | ||||||
| 600 | Gartner, Inc. * | 38,764 | ||||||
| 718 | Global Payments, Inc. | 45,245 | ||||||
| 927 | Informatica Corp. * | 35,994 | ||||||
| 1,531 | Ingram Micro, Inc., Class A * | 35,888 | ||||||
| 4,043 | Integrated Device Technology, Inc. * | 40,109 | ||||||
| 951 | InterDigital, Inc. | 32,234 | ||||||
| 1,407 | International Rectifier Corp. * | 33,691 | ||||||
| 3,290 | Intersil Corp., Class A | 34,614 | ||||||
| 930 | Itron, Inc. * | 39,379 | ||||||
| 697 | Jack Henry & Associates, Inc. | 39,569 | ||||||
| 1,093 | Lender Processing Services, Inc. | 38,393 | ||||||
| 942 | Lexmark International, Inc., Class A | 33,335 | ||||||
| 1,230 | ManTech International Corp., Class A | 35,383 | ||||||
| 1,560 | Mentor Graphics Corp. | 35,137 | ||||||
| 691 | MICROS Systems, Inc. * | 37,122 | ||||||
| 8,107 | Monster Worldwide, Inc. * | 45,641 | ||||||
| 1,237 | National Instruments Corp. | 38,665 | ||||||
| 954 | NCR Corp. * | 33,332 | ||||||
| 685 | NeuStar, Inc., Class A * | 33,397 | ||||||
| 789 | Plantronics, Inc. | 35,310 | ||||||
| 3,418 | Polycom, Inc. * | 36,739 | ||||||
| 1,289 | PTC, Inc. * | 41,960 | ||||||
| 783 | Rackspace Hosting, Inc. * | 29,915 | ||||||
| 6,944 | RF Micro Devices, Inc. * | 36,667 | ||||||
| 2,210 | Riverbed Technology, Inc. * | 38,226 | ||||||
See accompanying notes which are an integral part of these financial statements.
29
Cloud Capital Strategic Mid Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Information Technology – (continued) | |||||||
| 1,844 | Rovi Corp. * | $ | 33,927 | |||||
| 1,168 | Semtech Corp. * | 34,716 | ||||||
| 881 | Silicon Laboratories, Inc. * | 34,386 | ||||||
| 1,394 | Skyworks Solutions, Inc. * | 37,066 | ||||||
| 936 | SolarWinds, Inc. * | 31,298 | ||||||
| 653 | Solera Holdings, Inc. | 43,597 | ||||||
| 4,427 | SunEdison, Inc. * | 56,262 | ||||||
| 942 | Synopsys, Inc. * | 34,521 | ||||||
| 708 | Tech Data Corp. * | 36,690 | ||||||
| 1,523 | TIBCO Software, Inc. * | 36,821 | ||||||
| 1,361 | Trimble Navigation Ltd. * | 43,411 | ||||||
| 1,573 | ValueClick, Inc. * | 33,656 | ||||||
| 1,738 | VeriFone Systems, Inc. * | 44,518 | ||||||
| 2,726 | Vishay Intertechnology, Inc. * | 35,242 | ||||||
| 413 | WEX, Inc. * | 40,980 | ||||||
| 745 | Zebra Technologies Corp., Class A * | 38,611 | ||||||
|
| |||||||
| 2,584,611 | ||||||||
|
| |||||||
| Materials – 10.1% | |||||||
| 1,306 | Albemarle Corp. | 89,757 | ||||||
| 1,364 | AptarGroup, Inc. | 88,538 | ||||||
| 938 | Ashland, Inc. | 85,464 | ||||||
| 2,002 | Cabot Corp. | 97,706 | ||||||
| 1,474 | Carpenter Technology Corp. | 88,852 | ||||||
| 5,190 | Commercial Metals Co. | 100,785 | ||||||
| 1,121 | Compass Minerals International, Inc. | 80,222 | ||||||
| 1,051 | Cytec Industries, Inc. | 94,047 | ||||||
| 1,189 | Domtar Corp. | 101,672 | ||||||
| 1,245 | Eagle Materials, Inc. | 97,084 | ||||||
| 1,462 | Greif, Inc., Class A | 80,323 | ||||||
| 6,452 | Intrepid Potash, Inc. | 99,683 | ||||||
| 5,401 | Louisiana-Pacific Corp. * | 88,569 | ||||||
| 856 | Martin Marietta Materials, Inc. | 82,666 | ||||||
| 1,761 | Minerals Technologies, Inc. | 104,609 | ||||||
| 295 | NewMarket Corp. | 95,542 | ||||||
| 3,663 | Olin Corp. | 90,959 | ||||||
See accompanying notes which are an integral part of these financial statements.
30
Cloud Capital Strategic Mid Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Materials – (continued) | |||||||
| 1,517 | Packaging Corp. of America | $ | 92,904 | |||||
| 1,188 | Reliance Steel & Aluminum Co. | 87,331 | ||||||
| 721 | Rock-Tenn Co., Class A | 68,035 | ||||||
| 1,283 | Royal Gold, Inc. | 57,872 | ||||||
| 2,345 | RPM International, Inc. | 92,862 | ||||||
| 1,534 | Scotts Miracle-Gro Co./The, Class A | 89,860 | ||||||
| 1,963 | Sensient Technologies Corp. | 96,438 | ||||||
| 1,692 | Silgan Holdings, Inc. | 79,113 | ||||||
| 2,164 | Sonoco Products Co. | 86,706 | ||||||
| 5,217 | Steel Dynamics, Inc. | 95,052 | ||||||
| 1,279 | Valspar Corp. | 90,319 | ||||||
| 2,382 | Worthington Industries, Inc. | 99,890 | ||||||
|
| |||||||
| 2,602,860 | ||||||||
|
| |||||||
| Real Estate Investment Trusts – 1.9% | |||||||
| 274 | Alexandria Real Estate Equities, Inc. | 17,306 | ||||||
| 501 | American Campus Communities, Inc. | 16,249 | ||||||
| 942 | BioMed Realty Trust, Inc. | 17,511 | ||||||
| 349 | BRE Properties, Inc. | 17,872 | ||||||
| 270 | Camden Property Trust | 15,666 | ||||||
| 730 | Corporate Office Properties Trust | 16,222 | ||||||
| 1,173 | Duke Realty Corp. | 17,810 | ||||||
| 787 | Equity One, Inc. | 17,623 | ||||||
| 116 | Essex Property Trust, Inc. | 17,644 | ||||||
| 409 | Extra Space Storage, Inc. | 17,139 | ||||||
| 173 | Federal Realty Investment Trust | 17,911 | ||||||
| 514 | Highwoods Properties, Inc. | 18,448 | ||||||
| 293 | Home Properties, Inc. | 15,394 | ||||||
| 626 | Hospitality Properties Trust | 17,019 | ||||||
| 346 | Kilroy Realty Corp. | 17,442 | ||||||
| 489 | Liberty Property Trust | 15,845 | ||||||
| 811 | Mack-Cali Realty Corp. | 16,511 | ||||||
| 539 | National Retail Properties, Inc. | 17,114 | ||||||
| 597 | Omega Healthcare Investors, Inc. | 19,527 | ||||||
| 429 | Potlatch Corp. | 17,109 | ||||||
| 307 | Rayonier, Inc. | 13,533 | ||||||
See accompanying notes which are an integral part of these financial statements.
31
Cloud Capital Strategic Mid Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Real Estate Investment Trusts — (continued) | |||||||
| 430 | Realty Income Corp. | $ | 16,394 | |||||
| 346 | Regency Centers Corp. | 16,202 | ||||||
| 763 | Senior Housing Properties Trust | 17,274 | ||||||
| 194 | SL Green Realty Corp. | 17,554 | ||||||
| 506 | Taubman Centers, Inc. | 33,055 | ||||||
| 748 | UDR, Inc. | 17,410 | ||||||
| 591 | Weingarten Realty Investors | 16,861 | ||||||
|
| |||||||
| 491,645 | ||||||||
|
| |||||||
| Telecommunication Services – 0.1% | |||||||
| 592 | Telephone & Data Systems, Inc. | 16,461 | ||||||
| 590 | TW Telecom, Inc. * | 16,714 | ||||||
|
| |||||||
| 33,175 | ||||||||
|
| |||||||
| Utilities – 9.9% | |||||||
| 2,783 | Alliant Energy Corp. | 143,306 | ||||||
| 5,491 | Aqua America, Inc. | 132,172 | ||||||
| 3,327 | Atmos Energy Corp. | 147,893 | ||||||
| 2,812 | Black Hills Corp. | 141,347 | ||||||
| 3,048 | Cleco Corp. | 139,302 | ||||||
| 6,254 | Great Plains Energy, Inc. | 148,467 | ||||||
| 5,581 | Hawaiian Electric Industries, Inc. | 141,256 | ||||||
| 2,874 | IDACORP, Inc. | 148,525 | ||||||
| 5,074 | MDU Resources Group, Inc. | 150,558 | ||||||
| 2,078 | National Fuel Gas Co. | 140,240 | ||||||
| 5,889 | NV Energy, Inc. | 139,264 | ||||||
| 3,853 | OGE Energy Corp. | 132,605 | ||||||
| 10 | Oneok, Inc. | 581 | ||||||
| 6,162 | PNM Resources, Inc. | 143,379 | ||||||
| 6,154 | Questar Corp. | 138,594 | ||||||
| 3,467 | UGI Corp. | 139,597 | ||||||
| 4,157 | Vectren Corp. | 144,179 | ||||||
| 4,471 | Westar Energy, Inc. | 140,220 | ||||||
| 3,244 | WGL Holdings, Inc. | 129,270 | ||||||
|
| |||||||
| 2,540,755 | ||||||||
|
| |||||||
| TOTAL COMMON STOCKS (Cost $19,378,241) | 23,427,970 | ||||||
|
| |||||||
See accompanying notes which are an integral part of these financial statements.
32
Cloud Capital Strategic Mid Cap Fund
Schedule of Investments – (continued)
November 30, 2013
(Unaudited)
| Shares | Value | |||||||
| Exchange-Traded Funds – 2.3% | |||||||
| 1,000 | Guggenheim Russell MidCap Equal Weight ETF | $ | 45,790 | |||||
| 2,300 | SPDR S&P MidCap 400 ETF Trust | 546,089 | ||||||
|
| |||||||
| TOTAL EXCHANGE-TRADED FUNDS (Cost $558,817) | 591,879 | ||||||
|
| |||||||
| Cash Equivalents – 6.4% | |||||||
| 38,784 | FOLIOfn Investment Cash Account, 0.010% (a) | 38,784 | ||||||
| 1,610,675 | FOLIOfn Investment Sweep Account, 0.010% (a) | 1,610,675 | ||||||
|
| |||||||
| TOTAL CASH EQUIVALENTS (Cost $1,649,459) | 1,649,459 | ||||||
|
| |||||||
| TOTAL INVESTMENTS (Cost $21,586,517) – 100.1% | 25,669,308 | ||||||
|
| |||||||
| Liabilities in Excess of Other Assets – (0.1)% | (28,423 | ) | |||||
|
| |||||||
| NET ASSETS – 100.0% | $ | 25,640,885 | |||||
|
| |||||||
| (a) | Rate disclosed is the seven day yield as of November 30, 2013. |
| * | Non-income producing security. |
ETF – Exchange-Traded Fund
See accompanying notes which are an integral part of these financial statements.
33
Cloud Capital Funds
Statements of Assets and Liabilities
November 30, 2013
(Unaudited)
| Cloud Capital Strategic Large Cap Fund | Cloud Capital Strategic Mid Cap Fund | |||||||
Assets: | ||||||||
Investments in securities | ||||||||
At cost | $ | 34,317,219 | $ | 21,586,517 | ||||
|
|
|
| |||||
At fair value | $ | 42,960,389 | $ | 25,669,308 | ||||
Receivable for investments sold | 2,864,667 | — | ||||||
Receivable for fund shares sold | 1,801 | — | ||||||
Dividends receivable | 83,773 | 36,128 | ||||||
Prepaid expenses | 7,722 | 6,464 | ||||||
|
|
|
| |||||
Total assets | 45,918,352 | 25,711,900 | ||||||
|
|
|
| |||||
Liabilities: | ||||||||
Payable to Adviser | 61,746 | 24,636 | ||||||
Payable for investments purchased | 1,881 | 1,273 | ||||||
Payable for fund shares redeemed | 6,294 | 3,694 | ||||||
Payable to administrator, fund accountant and transfer agent | 17,685 | 17,068 | ||||||
Payable to custodian | 480 | 582 | ||||||
Administrative servicing fees – Institutional Class | 8,026 | 3,676 | ||||||
Other accrued expenses | 21,624 | 20,086 | ||||||
|
|
|
| |||||
Total Liabilities | 117,736 | 71,015 | ||||||
|
|
|
| |||||
Net Assets | $ | 45,800,616 | $ | 25,640,885 | ||||
|
|
|
| |||||
Net Assets consist of: | ||||||||
Paid in capital | $ | 33,901,086 | $ | 19,498,592 | ||||
Accumulated net investment income | 183,379 | 25,092 | ||||||
Accumulated net realized gain from | 3,072,981 | 2,034,410 | ||||||
Net unrealized appreciation on investments | 8,643,170 | 4,082,791 | ||||||
|
|
|
| |||||
Net Assets | $ | 45,800,616 | $ | 25,640,885 | ||||
|
|
|
| |||||
Institutional Class: | ||||||||
Shares Outstanding (unlimited number of shares authorized, no par value) | 2,421,121 | 1,400,740 | ||||||
|
|
|
| |||||
Net Asset Value, Offering and Redemption Per Share: | $ | 18.92 | $ | 18.31 | ||||
|
|
|
| |||||
See accompanying notes which are an integral part of these financial statements.
34
Cloud Capital Funds
Statements of Operations
For the six months ended November 30, 2013 (Unaudited)
| Cloud Capital Strategic Large Cap Fund | Cloud Capital Strategic Mid Cap Fund | |||||||
Investment Income | ||||||||
Dividend income | $ | 431,640 | $ | 205,759 | ||||
Interest income | 129 | 84 | ||||||
Foreign dividend taxes withheld | (262 | ) | (45 | ) | ||||
|
|
|
| |||||
Total Investment Income | 431,507 | 205,798 | ||||||
|
|
|
| |||||
Expenses: | ||||||||
Investment Adviser | 115,192 | 64,940 | ||||||
Administrative servicing – Institutional Class | 25,918 | 6,977 | ||||||
Administration | 18,801 | 18,802 | ||||||
Transfer agent | 16,970 | 15,926 | ||||||
Fund accounting | 12,534 | 12,534 | ||||||
Audit | 13,679 | 13,679 | ||||||
Legal | 6,766 | 7,419 | ||||||
Registration | 8,020 | 6,685 | ||||||
Pricing | 6,426 | 4,994 | ||||||
Custodian | 7,784 | 5,908 | ||||||
Printing | 7,503 | 7,254 | ||||||
Trustee | 1,561 | 1,561 | ||||||
Insurance | 2,546 | 2,547 | ||||||
CCO | 748 | 748 | ||||||
Miscellaneous | 1,429 | 1,401 | ||||||
|
|
|
| |||||
Total Expenses | 245,877 | 171,375 | ||||||
|
|
|
| |||||
Recoupment of prior expenses waived/reimbursed by Adviser | 76,621 | 10,423 | ||||||
|
|
|
| |||||
Net operating expenses | 322,498 | 181,798 | ||||||
|
|
|
| |||||
Net investment income | 109,009 | 24,000 | ||||||
|
|
|
| |||||
Realized & Unrealized Gain (Loss) on Investments | ||||||||
Net realized gain on investment transactions | 2,941,793 | 2,555,846 | ||||||
Change in unrealized appreciation (depreciation) of investments | 1,754,849 | (150,101 | ) | |||||
|
|
|
| |||||
Net realized and unrealized gain on investments | 4,696,642 | 2,405,745 | ||||||
|
|
|
| |||||
Net increase in net assets resulting from operations | $ | 4,805,651 | $ | 2,429,745 | ||||
|
|
|
| |||||
See accompanying notes which are an integral part of these financial statements.
35
Cloud Capital Funds
Statements of Changes in Net Assets
| Cloud Capital Strategic Large Cap Fund | Cloud Capital Strategic Mid Cap Fund | |||||||||||||||
| Six Months Ended November 30, 2013 | Year Ended May 31, 2013 | Six Months Ended November 30, 2013 | Year Ended May 31, 2013 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
Increase (Decrease) in Net Assets due to: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 109,009 | $ | 328,546 | $ | 24,000 | $ | 86,569 | ||||||||
Net realized gain on investment transactions | 2,941,793 | 2,678,233 | 2,555,846 | 1,538,431 | ||||||||||||
Net change in unrealized appreciation (depreciation) of investments | 1,754,849 | 6,924,578 | (150,101 | ) | 3,856,153 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase in net assets resulting from operations | 4,805,651 | 9,931,357 | 2,429,745 | 5,481,153 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Distributions: | ||||||||||||||||
From net investment income: | ||||||||||||||||
Institutional Class | – | (353,411 | ) | – | (115,431 | ) | ||||||||||
From net realized gain: | ||||||||||||||||
Institutional Class | – | (2,534,055 | ) | – | (1,143,207 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total distributions | – | (2,887,466 | ) | – | (1,258,638 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Capital Transactions – Institutional Class: | ||||||||||||||||
Proceeds from shares sold | 1,685,138 | 8,582,938 | 880,273 | 6,740,470 | ||||||||||||
Reinvestment of distributions | – | 1,499,196 | – | 491,612 | ||||||||||||
Amount paid for shares redeemed | (7,436,444 | ) | (8,930,053 | ) | (4,213,735 | ) | (5,428,385 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net change resulting from capital transactions | (5,751,306 | ) | 1,152,081 | (3,333,462 | ) | 1,803,697 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Increase (Decrease) in Net Assets | (945,655 | ) | 8,195,972 | (903,717 | ) | 6,026,212 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Assets: | ||||||||||||||||
Beginning of period | 46,746,271 | 38,550,299 | 26,544,602 | 20,518,390 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
End of period | $ | 45,800,616 | $ | 46,746,271 | $ | 25,640,885 | $ | 26,544,602 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Accumulated net investment income included in net assets at end of period | $ | 183,379 | $ | 74,370 | $ | 25,092 | $ | 1,092 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Share Transactions – Institutional Class: | ||||||||||||||||
Shares sold | 95,725 | 550,718 | 50,900 | 445,826 | ||||||||||||
Shares issued in reinvestment of distributions | – | 100,685 | – | 33,788 | ||||||||||||
Shares redeemed | (424,804 | ) | (567,724 | ) | (245,932 | ) | (354,925 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Institutional Class | (329,079 | ) | 83,679 | (195,032 | ) | 124,689 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
See accompanying notes which are an integral part of these financial statements.
36
Cloud Capital Strategic Large Cap Fund
Financial Highlights
(For a share outstanding during each period)
| For the six months ended November 30, 2013 (Unaudited) | For the year ended May 31, 2013 | For the period ended May 31, 2012(a) | ||||||||||
Institutional Class: | ||||||||||||
Selected Per Share Data: | ||||||||||||
Net asset value, beginning of period | $ | 17.00 | $ | 14.46 | $ | 15.00 | ||||||
|
|
|
|
|
| |||||||
Income from investment operations: |
| |||||||||||
Net investment income | 0.05 | 0.13 | 0.07 | |||||||||
Net realized and unrealized gain (loss) on investments | 1.87 | 3.54 | (0.54 | ) | ||||||||
|
|
|
|
|
| |||||||
Total from investment operations | 1.92 | 3.67 | (0.47 | ) | ||||||||
|
|
|
|
|
| |||||||
Less distributions to shareholders: | ||||||||||||
From net investment income | – | (0.14 | ) | (0.04 | ) | |||||||
From net realized gains | – | (0.99 | ) | (0.03 | ) | |||||||
|
|
|
|
|
| |||||||
Total distributions | – | (1.13 | ) | (0.07 | ) | |||||||
|
|
|
|
|
| |||||||
Net asset value, end of period | $ | 18.92 | $ | 17.00 | $ | 14.46 | ||||||
|
|
|
|
|
| |||||||
Total Return (b) | 11.29 | % (c) | 26.51 | % | (3.12 | )% (c) | ||||||
Ratios and Supplemental Data: | ||||||||||||
Net assets, end of period (000) | $ | 45,801 | $ | 46,746 | $ | 38,550 | ||||||
Ratio of expenses to average net assets | 1.40 | % (d) | 1.40 | % | 1.40 | % (d) | ||||||
Ratio of expenses to average net assets before waiver and recoupment | 1.07 | % (d) | 1.27 | % | 1.90 | % (d) | ||||||
Ratio of net investment income to average net assets | 0.47 | % (d) | 0.78 | % | 0.53 | % (d) | ||||||
Ratio of net investment income to average net assets before waiver and recoupment | 0.80 | % (d) | 0.91 | % | 0.03 | % (d) | ||||||
Portfolio turnover rate | 29.80 | % (c) | 72.66 | % | 163.38 | % (c) | ||||||
| (a) | For the period June 29, 2011 (commencement of operations) to May 31, 2012. |
| (b) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends. |
| (c) | Not annualized. |
| (d) | Annualized. |
See accompanying notes which are an integral part of these financial statements.
37
Cloud Capital Strategic Mid Cap Fund
Financial Highlights
(For a share outstanding during each period)
| For the six months ended November 30, 2013 (Unaudited) | For the year ended May 31, 2013 | For the period ended May 31, 2012(a) | ||||||||||
Institutional Class: | ||||||||||||
Selected Per Share Data: | ||||||||||||
Net asset value, beginning of period | $ | 16.63 | $ | 13.95 | $ | 15.00 | ||||||
|
|
|
|
|
| |||||||
Income from investment operations: |
| |||||||||||
Net investment income (loss) | 0.02 | 0.06 | – | (b) | ||||||||
Net realized and unrealized gain (loss) on investments | 1.66 | 3.50 | (0.92) | |||||||||
|
|
|
|
|
| |||||||
Total from investment operations | 1.68 | 3.56 | (0.92) | |||||||||
|
|
|
|
|
| |||||||
Less distributions to shareholders: | ||||||||||||
From net investment income | – | (0.08) | (0.01) | |||||||||
From net realized gains | – | (0.80) | (0.12) | |||||||||
|
|
|
|
|
| |||||||
Total distributions | – | (0.88) | (0.13) | |||||||||
|
|
|
|
|
| |||||||
Net asset value, end of period | $ | 18.31 | $ | 16.63 | $ | 13.95 | ||||||
|
|
|
|
|
| |||||||
Total Return (c) | 10.10 | % (d) | 26.46 | % | (6.13) | % (d) | ||||||
Ratios and Supplemental Data: | ||||||||||||
Net assets, end of period (000) | $ | 25,641 | $ | 26,545 | $ | 20,518 | ||||||
Ratio of expenses to average | 1.40 | % (e) | 1.40 | % | 1.40 | % (e) | ||||||
Ratio of expenses to average | 1.32 | % (e) | 1.60 | % | 2.18 | % (e) | ||||||
Ratio of net investment income (loss) to average net assets | 0.18 | % (e) | 0.38 | % | – | % (e) | ||||||
Ratio of net investment (loss) to average net assets before waiver and recoupment | 0.26 | % (e) | 0.18 | % | (0.78) | % (e) | ||||||
Portfolio turnover rate | 39.83 | % (d) | 85.71 | % | 178.49 | % (d) | ||||||
| (a) | For the period June 29, 2011 (commencement of operations) to May 31, 2012. |
| (b) | Amount is less than $0.005 per share. |
| (c) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends. |
| (d) | Not annualized. |
| (e) | Annualized. |
See accompanying notes which are an integral part of these financial statements.
38
Cloud Capital Funds
Notes to the Financial Statements
November 30, 2013
(Unaudited)
NOTE 1. ORGANIZATION
The Cloud Capital Strategic Large Cap Fund (the “Large Cap Fund”) and the Cloud Capital Strategic Mid Cap Fund (the “Mid Cap Fund”) (each a “Fund” and, collectively the “Funds”) were organized as open-end diversified series of the Valued Advisers Trust (the “Trust”). The Trust is a management investment company established under the laws of Delaware by an Agreement and Declaration of Trust dated June 13, 2008 (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 Funds are two of a series of funds authorized by the Board of Trustees (the “Board”). The Funds are each authorized to offer two share classes, Class A Shares and Institutional Class Shares. The Funds’ Class A Shares have not yet commenced operations. The Funds’ Institutional Class Shares commenced operations on June 29, 2011. The Funds’ investment adviser is Cloud Capital LLC (the “Adviser”). The investment objective of the Large Cap Fund is to consistently deliver excess returns relative to the S&P 500® Index over three- to five-year time horizons. The investment objective of the Mid Cap Fund is to consistently deliver excess returns relative to the S&P Mid Cap 400® Index over three- to five-year time horizons.
Each Fund’s prospectus provides a description of the investment objective, policies and strategies, along with information on the class of shares currently being offered.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by each Fund in the preparation of its financial statements.
Securities Valuation – All investments in securities are recorded at their estimated fair value as described in Note 3.
Federal Income Taxes – The Funds make no provision for federal income or excise tax. Each Fund intends to qualify each year as a regulated investment company (“RIC”) under subchapter M of the Internal Revenue Code of 1986, as amended, by complying with the requirements applicable to RICs and by distributing substantially all of its taxable income. Each Fund also intends to distribute sufficient net investment income and net capital gains, if any, so that it will not be subject to excise tax on undistributed income and gains. If the required amount of net investment income or gains is not distributed, the Funds could incur a tax expense.
39
Cloud Capital Funds
Notes to the Financial Statements - (continued)
November 30, 2013
(Unaudited)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - (continued)
As of and during the period ended November 30, 2013, the Funds did not have a liability for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the Funds did not incur any interest or penalties. The Funds are subject to examination by U.S. federal tax authorities for all tax years since inception.
Expenses – Expenses incurred by the Trust that do not relate to a specific fund of the Trust are allocated to the individual funds based on each Fund’s relative net assets or another appropriate basis (as determined by the Board).
Security Transactions and Related Income – The Funds follow industry practice and records security transactions on the trade date for financial reporting purposes. The first in, first out (“FIFO”) method is used for determining gains or losses for financial statements and income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Discounts and premiums on securities purchased are accreted or amortized using the effective interest method. Withholding taxes on foreign dividends have been provided for in accordance with the Funds’ understanding of the applicable country’s tax rules and rates. The ability of issuers of debt securities held by the Funds to meet their obligations may be affected by economic and political developments in a specific country or region.
Dividends and Distributions – Each Fund intends to distribute substantially all of its net investment income, if any, as dividends to its shareholders on at least an annual basis. Each Fund intends to distribute its net realized long term capital gains and its net realized short term capital gains, if any, at least once a year. Dividends to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The treatment for financial reporting purposes of distributions made to shareholders during the period from net investment income or net realized capital gains may differ from their ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gains for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of the net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications will have no effects on net assets, results of operations or net asset values per share of the Funds.
40
Cloud Capital Funds
Notes to the Financial Statements - (continued)
November 30, 2013
(Unaudited)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS
Fair value is defined as the price that a Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. Generally Accepted Accounting Principles in the United States of America (“GAAP”) establish a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes.
Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk (the risk inherent in a particular valuation technique used to measure fair value such as pricing model and/or the risk inherent in the inputs to the valuation technique). Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
Various inputs are used in determining the value of each Fund’s investments. These inputs are summarized in the three broad levels listed below.
| • | Level 1 – quoted prices in active markets for identical securities |
| • | Level 2 – other significant observable inputs (including, but not limited to, quoted prices for an identical security in an inactive market, quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
| • | Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining fair value of investments based on the best information available) |
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Equity securities, including common stock and exchanged-traded funds, are generally valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Fund believes such prices more accurately reflect the fair value of such securities. Securities that are traded on any stock exchange are generally
41
Cloud Capital Funds
Notes to the Financial Statements - (continued)
November 30, 2013
(Unaudited)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS - (continued)
valued by the pricing service at the last quoted sale price. Lacking a last sale price, an exchange traded security is generally valued by the pricing service at its last bid price. Securities traded in the NASDAQ over-the-counter market are generally valued by the pricing service at the NASDAQ Official Closing Price. When using the market quotations or close prices provided by the pricing service and when the market is considered active, the security will be classified as a Level 1 security. Sometimes, an equity security owned by the Fund will be valued by the pricing service with factors other than market quotations or when the market is considered inactive. When this happens, the security will be classified as a Level 2 security. When market quotations are not readily available, when the Fund determines that the market quotation or the price provided by the pricing service does not accurately reflect the current fair value, or when certain restricted or illiquid securities are being valued, such securities are valued as determined in good faith by the Fund, in conformity with guidelines adopted by and subject to review by the Board. These securities will be categorized as Level 3 securities.
In accordance with the Trust’s good faith pricing guidelines, each Fund is required to consider all appropriate factors relevant to the value of securities for which it has determined other pricing sources are not available or reliable as described above. No single standard exists for determining fair value, because fair value depends upon the circumstances of each individual case. As a general principle, the current fair value of an issue of securities being valued by the Fund would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale. Methods which are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market of a similar freely traded security (including a derivative security or a basket of securities traded on other markets, exchanges or among dealers); or (iii) yield to maturity with respect to debt issues, or a combination of these and other methods. Good faith pricing is permitted if, in the Fund’s opinion, the validity of market quotations appears to be questionable based on factors such as evidence of a thin market in the security based on a small number of quotations, a significant event occurs after the close of a market but before a Fund’s NAV calculation that may affect a security’s value, or the Fund is aware of any other data that calls into question the reliability of market quotations. Good faith pricing may also be used in instances when the bonds the Fund invests in may default or otherwise cease to have market quotations readily available. Any fair valuation pricing done outside the Fund’s approved pricing methods must be approved by the Pricing Committee of the Board.
42
Cloud Capital Funds
Notes to the Financial Statements - (continued)
November 30, 2013
(Unaudited)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS - (continued)
The following is a summary of the inputs used to value the Funds’ investments as of November 30, 2013:
| Valuation Inputs | ||||||||||||||||
| Large Cap Fund | Level 1 - Quoted Prices in Active Markets | Level 2 - Other Significant Observable Inputs | Level 3 - Significant Unobservable Inputs | Total | ||||||||||||
Common Stocks * | $ | 40,824,445 | $ | – | $ | – | $ | 40,824,445 | ||||||||
Cash Equivalents | 2,135,944 | – | – | 2,135,944 | ||||||||||||
Total | 42,960,389 | – | – | 42,960,389 | ||||||||||||
| Mid Cap Fund | ||||||||||||||||
Common Stocks * | 23,427,970 | – | – | 23,427,970 | ||||||||||||
Exchange-Traded Funds | 591,879 | – | – | 591,879 | ||||||||||||
Cash Equivalents | 1,649,459 | – | – | 1,649,459 | ||||||||||||
Total | 25,669,308 | – | – | 25,669,308 | ||||||||||||
| * | Refer to Schedule of Investments for industry classifications. |
The Funds did not hold any investments at any time during the reporting period in which significant unobservable inputs were used in determining fair value; therefore, no reconciliation of Level 3 securities is included for this reporting period. The Funds did not hold any derivative instruments during the reporting period.
The Trust recognizes transfers between fair value hierarchy levels at the end of the reporting period. There were no transfers between any levels for the period ended November 30, 2013.
NOTE 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the management agreement, on behalf of the Funds (the “Agreement”), the Adviser manages each Fund’s investments subject to oversight of the Trustees. As compensation for its management services each Fund is obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 0.50% of the average daily net assets of the Fund. For the six months ended November 30, 2013, the Adviser earned fees of $115,192 from the Large Cap Fund and $64,940 from the Mid Cap Fund before the recoupment described below. At November 30, 2013, the Funds owed the Adviser $61,746 and $24,636, respectively, for management fees earned over expenses waived and recouped during the period.
43
Cloud Capital Funds
Notes to the Financial Statements - (continued)
November 30, 2013
(Unaudited)
NOTE 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES – (continued)
The Adviser has contractually agreed to waive or limit its fees and to assume other expenses of each Fund until May 31, 2014, so that total annual fund operating expenses do not exceed 1.40%. This operating expense limitation does not apply to borrowing costs (such as interest and dividend expenses on securities sold short), taxes, brokerage fees and commissions, and expenses incurred under a plan of distribution adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“Excluded Expenses”). This limitation also excludes any “acquired fund fees and expenses” as that term is described in each Fund’s prospectus.
The waiver and/or reimbursement by the Adviser with respect to the Funds are subject to repayment by the Funds within the three fiscal years following the fiscal year in which that particular waiver and/or reimbursement occurred, provided that the Funds are able to make the repayment without exceeding the expense limitations described above. For the period ended November 30, 2013, Adviser recouped $76,621 from the Large Cap Fund and $10,423 from the Mid Cap Fund.
The amounts subject to repayment by the Funds, pursuant to the aforementioned conditions are as follows:
| Fund | Amount | Recoverable through May 31, | ||||||
Large Cap Fund | $ | 320 | 2015 | |||||
Mid Cap Fund | 131,822 | 2015 | ||||||
| 46,393 | 2016 | |||||||
The Trust retains Huntington Asset Services, Inc. (“HASI”) to manage each Fund’s business affairs and provide each Fund with administrative services, including all regulatory reporting and necessary office equipment and personnel. For the period ended November 30, 2013, HASI earned fees of $18,801 for the Large Cap Fund and $18,802 for the Mid Cap Fund. At November 30, 2013, HASI was owed $6,301 from the Large Cap Fund and $6,301 from the Mid Cap Fund for administrative services.
The Trust also retains HASI to act as the Fund’s transfer agent and to provide fund accounting services. For the period ended November 30, 2013, HASI earned fees of $16,970 for the Large Cap Fund and $15,926 for the Mid Cap Fund for transfer agent services and reimbursement for out-of-pocket expenses incurred in providing transfer agent services. At November 30, 2013, HASI was owed $7,183 from the Large Cap Fund and $6,566 from the Mid Cap Fund for transfer agent services and out-of-pocket expenses. For the period ended November 30, 2013, HASI earned fees of $12,534 from
44
Cloud Capital Funds
Notes to the Financial Statements - (continued)
November 30, 2013
(Unaudited)
NOTE 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES – (continued)
the Large Cap Fund and $12,534 from the Mid Cap Fund for fund accounting services. At November 30, 2013, HASI was owed $4,201 from the Large Cap Fund and $4,201 from the Mid Cap Fund for fund accounting services.
Certain officers (and one Trustee) of the Trust are members of management and/or employees of HASI. HASI is a wholly-owned subsidiary of Huntington Bancshares, Inc., the parent company of Unified Financial Securities, Inc. (the “Distributor”).
The Funds have adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Funds will pay the Distributor and/or any registered securities dealer, financial institution or any other person (the “Recipient”) a fee of 0.40% of the average daily net assets of the Class A Shares of each Fund in connection with the promotion and distribution of Fund’s shares or the provision of personal services to shareholders, including, but not necessarily limited to, advertising, compensation to underwriters, dealers and selling personnel, the printing and mailing of prospectuses to other than current Fund shareholders, the printing and mailing of sales literature and servicing shareholder accounts. The Funds or Adviser may pay all or a portion of these fees to any Recipient who renders assistance in distributing or promoting the sale of shares, or who provides certain shareholder services, pursuant to a written agreement. The Plan is a compensation plan, which means that compensation is provided regardless of 12b-1 expenses actually incurred. It is anticipated that the Plan will benefit shareholders because an effective sales program typically is necessary in order for the Funds to reach and maintain a sufficient size to achieve efficiently its investment objectives and to realize economies of scale. There were no 12b-1 fees for the period ended November 30, 2013, as the Class A Shares of each Fund have yet to commence operations.
The Funds may pay certain financial intermediaries that provide certain administrative services to shareholders who invest in the Institutional Class shares of the Funds, including record keeping and sub-accounting shareholder accounts. Each Fund is authorized to pay up to 0.25% of the average daily net assets of each Fund’s Institutional Class shares. The payments may also be made to certain financial intermediaries in connection with client account maintenance support, statement preparation and transaction processing. The types of payments under this category include, among others, payment of ticket charges per purchase or exchange order placed by a financial intermediary, payment of networking or other recordkeeping fees, or one-time payments for ancillary services such as setting up the Funds on a financial intermediary’s trading systems. For the period ended November 30, 2013, the Large
45
Cloud Capital Funds
Notes to the Financial Statements - (continued)
November 30, 2013
(Unaudited)
NOTE 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES – (continued)
Cap Fund and Mid Cap Fund incurred administrative servicing fees of $25,918 and $6,977, respectively. At November 30, 2013, the Large Cap Fund and Mid Cap Fund owed $8,026 and $3,676 in administrative servicing fees, respectively.
The Distributor acts as the principal distributor of the Funds’ shares. An officer of the Trust is an officer of the Distributor and such person may be deemed to be an affiliate of the Distributor. For the period ended November 30, 2013, there were no sales charges or CDSC fees deducted from the proceeds of sales, and redemption of capital shares, as the Fund’s Class A shares have not yet commenced.
NOTE 5. PURCHASES AND SALES OF SECURITIES
For the period ended November 30, 2013, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations, were as follows:
| Fund | Purchases | Sales | ||||||
Large Cap Fund | $ | 12,771,905 | $ | 21,551,306 | ||||
Mid Cap Fund | $ | 9,552,082 | $ | 12,988,830 | ||||
NOTE 6. ESTIMATES
The preparation of financial statements in conformity with 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 increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
46
Cloud Capital Funds
Notes to the Financial Statements - (continued)
November 30, 2013
(Unaudited)
NOTE 7. BENEFICIAL OWNERSHIP
The beneficial ownership, either directly or indirectly, of 25% or more of the voting securities of a fund creates a presumption of control of a fund, under Section 2(a) (9) of the Investment Company Act of 1940. At November 30, 2013, FOLIOfn Investments, Inc. (“FOLIOfn”) and National Financial Services LLC (“NFS”) owned, as record shareholders, 27.46% and 25.40%, respectively, of the outstanding shares of the Large Cap Fund. At November 30, 2013, FOLIOfn and TD Ameritrade Trust Company (“TD Ameritrade”) owned, as record shareholder, 32.04 % and 29.88 %, respectively, of the outstanding shares of the Mid Cap Fund. The Trust does not know whether FOLIOfn, or TD Ameritrade or any of the underlying beneficial owners owned or controlled 25% or more of the voting securities of the Funds.
NOTE 8. FEDERAL TAX INFORMATION
At November 30, 2013, the net unrealized appreciation (depreciation) of investments for tax purposes was as follows:
| Fund | Tax Cost of Securities | Unrealized Appreciation | Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | ||||||||||||
Large Cap Fund | $ | 35,274,176 | $ | 7,876,317 | $ | (190,104 | ) | $ | 7,686,213 | |||||||
Mid Cap Fund | 23,007,685 | 2,954,492 | (292,869 | ) | 2,661,623 | |||||||||||
The difference between book basis and tax basis unrealized appreciation was attributable primarily to the tax deferral of losses on wash sales of $956,957 for the Large Cap Fund and $1,421,168 for the Mid Cap Fund.
On December 13, 2013, the Large Cap Fund paid an income distribution of $0.082378 per share, a short-term capital gain distribution of $0.072754 per share, and a long-term capital gain distribution of $1.651154 per share to shareholders of record as of December 12, 2013.
On December 13, 2013, the Mid Cap Fund paid an income distribution of $0.014449 per share, a short-term capital gain distribution of $0.158559 per share, and a long-term capital gain distribution of $1.93447 per share to shareholders of record as of December 12, 2013.
47
Cloud Capital Funds
Notes to the Financial Statements - (continued)
November 30, 2013
(Unaudited)
NOTE 8. FEDERAL TAX INFORMATION – (continued)
The tax characterization of distributions paid for the fiscal year ended May 31, 2013 was as follows:
| Fund | Ordinary Income* | Long-Term Capital Gains | Total Distributions | |||||||||
Large Cap Fund | $ | 2,686,027 | $ | 201,439 | $ | 2,887,466 | ||||||
Mid Cap Fund | 1,156,729 | 101,909 | 1,258,638 | |||||||||
| * | Short-term capital gain distributions are treated as ordinary income for tax purposes. |
At May 31, 2013, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
| Fund | Ordinary Income | Undistributed Long-Term Capital Gains | Unrealized Appreciation | Other Temporary Differences | Total Accumulated Earnings | |||||||||||||||
Large Cap Fund | $ | 84,502 | $ | 1,084,946 | $ | 5,931,364 | $ | (6,933 | ) | $ | 7,093,879 | |||||||||
Mid Cap Fund | 50,325 | 854,953 | 2,814,203 | (6,933 | ) | 3,712,548 | ||||||||||||||
NOTE 9. SUBSEQUENT EVENT
Management of the Funds has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date these financial statements were issued. Based upon this evaluation, and at a Board meeting held December 9-11, 2013, Andrea N. Mullins was appointed to serve as Trustee to the Trust and Bryan W. Ashmus was appointed to serve as Principal Financial Officer and Treasurer. And effective January 15, 2014, Dr. Merwyn R. Vanderlind resigned as a Trustee of the Board.
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VALUED ADVISERS TRUST
PRIVACY POLICY
The following is a description of the policies of the Valued Advisers Trust (the “Trust”) regarding disclosure of nonpublic personal information that shareholders provide to a series of the Trust (each, a “Fund”) or that the Fund collects from other sources. In the event that a shareholder hold shares of a Fund through a broker-dealer or other financial intermediary, the privacy policy of the financial intermediary would govern how shareholder nonpublic personal information would be shared with nonaffiliated third parties.
Categories of Information A Fund May Collect. A Fund may collect the following nonpublic personal information about its shareholders:
| • | Information the Fund receives from a shareholder on applications or other forms, correspondence, or conversations (such as the shareholder’s name, address, phone number, social security number, and date of birth); and |
| • | Information about the shareholder’s transactions with the Fund, its affiliates, or others (such as the shareholder’s account number and balance, payment history, cost basis information, and other financial information). |
Categories of Information A Fund May Disclose. A Fund may not disclose any nonpublic personal information about its current or former shareholders to unaffiliated third parties, except as required or permitted by law. A Fund is permitted by law to disclose all of the information it collects, as described above, to its service providers (such as the Fund’s custodian, administrator, transfer agent, accountant and legal counsel) to process shareholder transactions and otherwise provide services to the shareholder.
Confidentiality and Security. Each Fund shall restrict access to shareholder nonpublic personal information to those persons who require such information to provide products or services to the shareholder. Each Fund shall maintain physical, electronic, and procedural safeguards that comply with federal standards to guard shareholder nonpublic personal information.
Disposal of Information. The Funds, through their transfer agent, have taken steps to reasonably ensure that the privacy of a shareholder’s nonpublic personal information is maintained at all times, including in connection with the disposal of information that is no longer required to be maintained by the Funds. Such steps shall include, whenever possible, shredding paper documents and records prior to disposal, requiring off-site storage vendors to shred documents maintained in such locations prior to disposal, and erasing and/or obliterating any data contained on electronic media in such a manner that the information can no longer be read or reconstructed.
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OTHER INFORMATION
The Funds’ Statement of Additional Information (“SAI”) includes additional information about the trustees and is available without charge, upon request. You may call toll-free at (877) 670-2227 to request a copy of the SAI or to make shareholder inquiries.
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PROXY VOTING
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities and information regarding how each Fund voted those proxies during the most recent twelve month period ended June 30, is available without charge upon request by (1) calling the Funds at (877) 670-2227 and (2) from Funds documents filed with the Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov.
TRUSTEES
R. Jeffrey Young, Chairman
Ira Cohen
Andrea N. Mullins
OFFICERS
R. Jeffrey Young, Principal Executive Officer and President
John C. Swhear, Chief Compliance Officer, AML Officer and Vice-President
Carol J. Highsmith, Vice President
Matthew J. Miller, Vice President
Bryan W. Ashmus, Principal Financial Officer and Treasurer
Heather A. Bonds, Secretary
INVESTMENT ADVISER
Cloud Capital LLC
5314 South Yale, Suite 606
Tulsa, OK 74135
DISTRIBUTOR
Unified Financial Securities, Inc.
2960 North Meridian Street, Suite 300
Indianapolis, IN 46208
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Cohen Fund Audit Services, Ltd.
1350 Euclid Avenue, Suite 800
Cleveland, OH 44115
LEGAL COUNSEL
The Law Offices of John H. Lively & Associates, Inc.
A member firm of The 1940 Act Law Group TM
11300 Tomahawk Creek Parkway, Suite 310
Leawood, KS 66211
CUSTODIAN
FOLIOfn Investments, Inc.
8180 Greensboro Drive
8th Floor
McLean, VA 22102
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT
Huntington Asset Services, Inc.
2960 North Meridian Street, Suite 300
Indianapolis, IN 46208
This report is intended only for the information of shareholders or those who have received the Funds’ prospectus which contains information about the Funds’ management fee and expenses. Please read the prospectus carefully before investing.
Distributed by Unified Financial Securities, Inc.
Member FINRA/SIPC
To Shareholders of the LS Opportunity Fund,
Long Short Advisors, LLC (LSA, the “Advisor”) launched the LS Opportunity Fund (LSOFX, the “Fund”) on September 30, 2010 to offer access to Independence Capital Asset Partners’ (ICAP, the “Sub-Advisor”) $600 million long/short equity strategy in a 1940 Act mutual fund structure. While the Fund was established in 2010, the investment team at ICAP has been operating a traditional hedge fund with a similar investment objective since 2004. The Fund aims to identify compelling long/short investment opportunities through a bottom-up stock selection process based upon in-depth analysis of business and financial fundamentals. Through extensive research, implementation of risk management, diversification and limited use of leverage, the Fund strives to do what a successful investment manager should do – preserve capital while delivering above-market returns and managing volatility. For more information on the Advisor, Sub-Advisor or the Fund, please visit our website at www.longshortadvisors.com.
Market Review
The six-month period ending November 30, 2013 (the “Period”) began with a surprising announcement by U.S. Federal Reserve (the “Fed”) Chairman Ben Bernanke on June 18 that the Fed could start “tapering” its quantitative easing program as early as September 2013, well ahead of then current market assumptions. Upon the news, interest rates rose, both equity and bond prices fell and the selling became self-reinforcing. However, global markets became more comfortable with the Federal Reserve’s tapering strategy throughout July and many risk assets recovered. In fact, the market gained 13.4% between the end of June 2013 and the end of the period on November 30, 2013.
Overall, the S&P 500 finished the Period with a total return of 11.9%, while the Fund posted a total return of 11.2%. We believe the Fund’s comparison to the long-only S&P 500 should be evaluated in the context of net exposure, where the Fund had an average month-end net long exposure for the Period of just 61% relative to the S&P 500 at 100%. Thus, on an exposure-adjusted basis the Fund outperformed the S&P 500 at 11.2% > 7.3% (11.9% return * 61% net exposure). Additionally, the Fund consistently outperformed its long/short equity benchmark, the HFRI Equity Hedge (Total) Index (HFRI), which returned just 5.8%. The monthly cumulative returns over the Period are shown below, assuming a beginning of Period investment of $10,000.
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Management Discussion of Fund Performance
Despite the selloff in global equity markets and the significant change in the direction of interest rates in late June, ICAP believed a more nuanced view of tapering was appropriate. ICAP concluded that unless there were extraordinary circumstances, the “tapering” would be gradual and precede subsequent interest rate hikes by 18-24 months. Under this scenario, equities could remain strong and this view was reflected in the portfolio.
Contributors
The Fund profited from widespread success during the Period, with individual stocks within the healthcare (Celgene – CELG, Endo Health Solutions – ENDP), financials (Ocwen – OCN), consumer discretionary (Liberty Media – LMCA) and industrials (Alliant Techsystems – ATK) sectors each contributing ~100 basis points to the Fund’s total return.
Overall, the healthcare sector was the largest contributor to performance in the Period, and three of our top 10 positions as of November 30, 2013 remain healthcare stocks. The healthcare sector, which represents more than 20% of the U.S. economy, has consistently been among one of our team’s core investment areas. Demographics, pricing, facilities, health insurance, efficiency gains, healthcare technology and life-saving and extending therapies are a just a few areas of our healthcare research. Overlay this mosaic with heavy regulation, Medicare, Medicaid and the implementation of Obamacare, it is easy to quickly get lost in the investing morass. Not only must an investor in this area have an in-depth understanding of each of these factors, the investor must see how all the pieces interrelate. The value that continues to be generated for the Fund’s shareholders by investments in the healthcare sector gives us confidence that we have a firm grasp on the pieces of the puzzle, and healthcare will remain a rich source of ideas in the future.
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Detractors
While the Fund avoided any single position loss of more than 35 basis points in terms of overall portfolio attribution for the Period, notable detractors included DaVita (DVA), Citigroup (C) and Phillips 66 (PSX), the latter two of which were sold during the Period.
Management Outlook
As we look forward, a continued rise in interest rates could become the most influential factor in global equity markets. When the Fed pulls back on asset purchases in 2014, interest rates could rise and potentially cause a dislocation similar to last summer. However, the cause of interest rate movements and resulting effect on equity markets can oftentimes seem counterintuitive to investors.
For example, a strong job number would normally be viewed as a positive for both economic growth prospects and the equity markets. However, as the Fed now operates under a jobs mandate, lower unemployment will also lead to a tapering of asset purchases by the Fed, which will in turn put unusual pressure on interest rates to move higher and could temporarily drive equity markets lower as it did this past summer. Investors should note that there have been 16 expansionary periods in the United States since 1919, during which interest rates rose the greatest. On average, the S&P 500 returned approximately 12% over the first 12 months of each expansion. More importantly, the market rose on an absolute basis in 13 of those 16 periods, and only traded off more than 10% in one period, the 12 months ended 5/31/1940 (Source: FA Magazine, September 17, 2013, “What Happens To Stocks When Interest Rates Rise?”).
It is this double-edged sword of rising rates that makes predicting the markets direction in 2014 even more difficult. This dynamic environment is an excellent backdrop for long-short equity investing, and justifies the time we take to carefully construct a portfolio of economically independent, individual stock positions on both the long side and short side of our portfolio.
At Period’s end, the Fund’s top 10 positions represented approximately 43.6% of the long book and included Celgene (CELG), Chicago Bridge & Iron (CBI), Endo Health Solutions (ENDP), Gilead Sciences (GILD), Liberty Global (LBTYA), Liberty Media (LMCA), Mastercard (MA), Mead Johnson Nutrition (MJN), Ocwen Financial (OCN) and Qualcomm (QCOM).
Also at Period’s end, our short book is populated by individual stocks with negative company specific catalysts, including those at risk to the following themes:
| • | healthcare stocks that will be hurt by a potential slowdown in hospital spending due to changes in government policy |
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| • | technology hardware firms ceding share in an industry increasingly dominated by software operated remotely |
| • | industrial companies trying to right size their business to current lower demand for raw materials |
| • | financial firms exposed to a potential increase in interest rates |
From the Fund’s inception, we have been deliberate in our process and patient with our long-term investments despite periods of extreme volatility and unsettling macro-economic developments. We feel our process has served us well over time and continues to generate out-of-consensus investment ideas that we believe will provide strong risk-adjusted returns for the Fund into the future.
Thank you for your continued support and we look forward to reporting to you again at the end of our fiscal year in May 2014.
Sincerely,
Jim Hillary, Chris Hillary
Co-Portfolio Managers, LS Opportunity Fund
4
Does Size Matter When It Comes to Long/Short Equity Managers?
Asset growth continues to accelerate in the liquid alternative mutual fund category. While the growth has been substantial, it has also been highly concentrated in a small number of individual funds. Drilling down into the long/short equity mutual fund category, as defined by Morningstar, total assets under management (AUM) spiked 88% in the twelve months ended November 30, 2013 to $47 billion from $25 billion a year ago. 86% of this growth was concentrated in just eight funds which ended the Period each with more than $1 billion in AUM.
At Long Short Advisors, we continue to encourage the growth of the long/short equity and overall alternative investment universe. We believe there is substantial runway of asset growth before alternatives hit a saturation point in investor portfolios, as most investors and advisors alike have only been utilizing alternative mutual funds for a matter of years, not decades. However, we would like to remind investors that when evaluating any strategy from long-only small cap value to large cap blend, every great strategy has a limit to AUM growth before size starts to inhibit the investment process. So when evaluating a new long/short equity strategy, remember to ask and understand the following:
| • | What is the total asset capacity of the fund? |
| • | How will the investable long universe change as assets grow? |
| • | How will the investable short universe change as assets grow? |
| • | Could performance be negatively affected by higher AUM levels? |
| • | How is the investment team compensated? |
What is the total asset capacity of the fund?
Similar to long-only funds, there are also pros and cons to total AUM which depend on which alternative strategy an investor chooses for their allocation. It is important to get an idea up front of what a manager thinks capacity for their strategy should be, while raising a red flag when that level is materially breached. The following are general parameters to consider when choosing between a small fund (i.e. less than $1 billion AUM) and a large fund:
| Small Fund | Large Fund | |||
Investment Universe | Unlimited | Constrained | ||
Investment Team | Small | Large | ||
Primary Decision Maker | Portfolio Manager | Team | ||
Portfolio Manager Incentive | Performance | AUM Maintenance | ||
Perception of Risk | High | Low | ||
Short Book Constraints | Low | High | ||
Fees | Above Average | Average |
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Again, similar to a typical long-only allocation, investors should consider a barbell approach to investing in alternatives with a large portion of the portfolio anchored in large, “defensive” funds, and the balance in smaller, alpha driven strategies. There are definitive positive and negative aspects of both small and large asset bases, making a diversified approach more prudent.
How will the long investable universe change as assets grow?
Huber Capital Management LLC performed a study in 2006 (“Limited Assets Under Management IS a Competitive Advantage”) to show the potential investment opportunity set for equity managers at different AUM levels, assuming a portfolio with a 2.5% position weight restriction. The conclusion of their study was that at certain breakpoint asset levels, fund managers are faced with the dilemma of choosing one of the following paths, none of which appears particularly apppealing:
| 1. | Materially shrink the investment universe to maintain prior liquidity standards |
| 2. | Materially increase the number of positions in the portfolio to maintain the prior investable universe |
| 3. | Acquire a greater than 5% stake in individual companies, severely limiting liquidity |
Option #1 limits the manager’s ability to invest in only the best ideas in the entire market, forcing them to choose just those ideas within a limited liquidity universe.
Option #2 dilutes a manager’s ability to express conviction in their best ideas and makes the overall portfolio more “index-like” as each incremental position beyond a core 50 stock portfolio is likely to generate less alpha than the last.
Option #3 reduces the level of liquidity in the overall portfolio and exposes the fund to increased volatility risk due to SEC filing requirements that are triggered when equity ownership surpasses a 5% threshold.
The following chart shows Huber’s data for the small capitalization (“small cap”) universe highlighted by the Russell 2000 Value index. It quickly becomes evident that the universe of available small cap securities begins to materially shrink as total fund AUM grows past $500 million. At $1 billion AUM, the investable universe shrinks by almost 50%; at $2 billion AUM, the universe shrinks by 75%!
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If we broaden this outlook to the large capitalization (“large cap”) space, the numbers change, but the conclusion is the same. Looking at the Russell 1000 Value index represented below, the universe of available large cap stocks shrinks by 25% at $5 billion AUM, and by 50% at $10 billion AUM.
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What is important to note is that bringing both datasets into the equation, a fund with greater than $5 billion AUM is unable to exert any conviction in small cap stocks through large weights in the portfolio, and only 75% of the universe of large cap stocks is available in a similarly liquid manner. Thus, an investor can infer that this manager’s opportunity set is limited relative to a smaller, more nimble peer who has the entire universe of U.S. stocks at their disposal.
How will the short investable universe change as assets grow?
Lost in the conversation above is the precise effect of asset size on a long/short equity fund’s short portfolio. As a brief primer, a short sale is a transaction where an investor borrows shares of stock from a broker and sells the shares on the open market in anticipation of a market decline. The investor must eventually return the borrowed stock by buying it back at the then prevailing market price.
The wrinkle is that an investor must “locate” stock available to borrow before entering into a short sale trade. Since not all shares of a company’s stock are able to be borrowed, there is a significant limitation to the number of outstanding shares available for investors to sell short. Put another way, the entire market capitalization of a company is never available to borrow, and thus any restriction on the size of a long position becomes even tighter when dealing with short positions. When asking the
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capacity question to a long/short equity fund, it will always be the short side of the portfolio that is the primary cause for concern to a portfolio manager.
Let us return to the theoretical fund referred to above that has $2 billion AUM and is thus limited to liquid long small cap holdings of just 25% of the total investable universe of small cap stocks. Since we now know that the available market cap of the same companies on the short side is a fraction of that available on the long side, this total investable universe is actually significantly smaller than 25%. Thus, investors will frequently see larger fund managers replace high conviction individual stock shorts with lower conviction ETFs and options positions to express their short theses, which could come at the expense of performance.
Could performance be negatively affected by higher AUM levels?
Recent studies from Pertrac (“Impact on Size and Age on Hedge Fund Performance: 1996-2011”; October 2012) and Beachhead Capital (“Performance of Emerging Equity Long/Short Hedge Fund Managers: 2003-2012”; February 2013) conclude that hedge fund returns are negatively impacted as assets under management increase. While the Pertrac study broke the initial ground, it tries to be all things to all people. Beachhead’s take, on the other hand, narrows the universe down to just long/short equity hedge funds from calendar years 2003-2012.
The most important takeaway from Beachhead’s study is the following chart, which shows the outperformance of small vs. large long/short equity hedge funds over both a 10 year and 5 year period:
9
As noted in the first section, larger funds have benefits such as lower fees and lower investor perception of both fund and firm specific risk. However, the chart above shows that smaller long/short equity hedge funds in the aggregate have historically posted significantly better performance. If you consider anything with less than $500 million AUM to be a “small fund”, small funds outperformed their larger peers by 220 basis points per annum over 10 years. If you increase the “small fund” threshold to those with less than $1 billion AUM, the annual outperformance falls to a still surprising and consistent 110 basis points over a 10 year period.
How is the investment team compensated?
There are three distinct ways to incentivize an investment team in the long/short equity category, and the structure of compensation tends to differ greatly between small funds and large funds:
| • | Management Fees |
| • | Traditional form of compensation for mutual fund firms, both long-only and long/short |
| • | Tied solely to total AUM level of the fund |
| • | If assets remain steady, pay is consistent for the life of the fund, providing less motivation for the investment team to try to outperform on an annual basis and could lead to “closet indexing” |
| • | Performance Fees |
| • | Traditional form of compensation for hedge fund firms |
| • | Tied solely to the annual performance of the fund |
| • | Payout resets to zero on January 1 each year, creating perpetual motivation for the investment team to try to outperform every year |
| • | Compound Returns on Personal Investment |
| • | Hedge funds and small mutual funds tend to have managers who seed their strategy with personal funds |
| • | Tied solely to the long-term performance of the fund |
| • | Similar to performance fees, payout is reset to zero at the start of each year |
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Tying it all together
The Fund remains unique in the space through our partnership with our Sub-Advisor, ICAP. ICAP manages $600 million in aggregate capital, with over $500 million of that capital in a performance fee structure. As a shareholder of LSOFX, you have exclusive access to ICAP’s hedge fund strategy in a daily liquid mutual fund format that does not charge performance fees. ICAP remains small enough to maintain the ability to invest across all market capitalizations, but are large enough to support a seasoned ten member investment team. Not only are they incentivized to outperform through the majority of AUM being in a performance fee structure, but of the $600 million in aggregate capital, over 10% belongs to the investment team, allowing them to also generate a substantial amount of wealth through simple compounding of their personal investment.
Thank you for choosing the LS Opportunity Fund as a place to invest your assets. We appreciate your trust in us to help manage and grow your capital.
Please refer to the Fund’s prospectus for a full description of the investment strategy and for more information about the Fund. You may obtain a current copy of the Fund’s prospectus by calling 1-877-366-6763, or visiting our website at www.longshortadvisors.com and clicking on the ‘Fund Information’ tab.
For additional questions or to discuss this report in more detail, please contact us at 215-399-9409, or via email at info@longshortadvisors.com
“Don’t time the market, invest in it”
The views and opinions expressed in management’s discussion of Fund performance are those of the advisor and sub-advisor as of the end of the period. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but neither the advisor nor the sub-advisor makes any representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
The S&P 500 Index, Russell 1000® Value Index and Russell 2000® Value Index are widely recognized unmanaged indices of equity securities and are representative of a broader market and range of securities than is found in the Fund’s portfolio. The Index is an unmanaged benchmark that assumes reinvestment of all distributions and excludes the effect of taxes and fees. Individuals cannot invest directly in this Index; however, an individual can invest in
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exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index. HFRI Equity Hedge Index is compiled by Hedge Fund Research, Inc. It is comprised solely of hedge funds, and is designed to be representative of the overall composition of the hedge fund universe implementing a long/short equity strategy. The Funds’ performance is not intended to reflect the performance of the Index, which is provided for comparison purposes only. The Index is not available for direct investment. Standard Deviation is a measure of the dispersion of a set of data from its mean. Alpha is a measure of performance on a risk adjusted basis. Beta is a measure of the volatility of a portfolio relative to the overall market. Correlation is a statistical measure of how two securities move in relation to each other. Sharpe Ratio uses standard deviation and excess return to determine reward per unit of risk.
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Investment Results – (Unaudited)
Total Returns* |
| |||||||||||
(For the period ended November 30, 2013) |
| |||||||||||
| Average Annual Returns | ||||||||||||
| 6 Months | One Year | Since Inception (September 30, 2010) | ||||||||||
LS Opportunity Fund | 11.21 | % | 22.62 | % | 9.73 | % | ||||||
S&P 500® Index** | 11.91 | % | 30.30 | % | 17.98 | % | ||||||
Total annual operating expenses, as disclosed in the Fund’s prospectus dated September 30, 2013, were 3.13% of average daily net assets (2.73% after fee waivers and expense reimbursements by the Adviser.) Long Short Advisors, LLC (the “Adviser”) contractually has agreed to waive or limit its fees and to assume other expenses of the Fund until September 30, 2014, so that the ratio of total annual operating expenses does not exceed 1.95%. This operating expense limitation does not apply to interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with generally accepted accounting principles, other extraordinary expenses not incurred in the ordinary course of the Fund’s business, dividend expense on short sales, expenses incurred under a Rule 12b-1 plan of distribution, “acquired fund fees and expenses,” and expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement.
The performance quoted represents past performance, which does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-877-336-6763.
* Return figures reflect any change in price per share and assume the reinvestment of all distributions, if any.
** The S&P 500® Index is a widely recognized unmanaged index of equity prices and is representative of a broader market and range of securities than is found in the Fund’s portfolio. The Index is an unmanaged benchmark that assumes reinvestment of all distributions and excludes the effect of taxes and fees. Individuals cannot invest directly in this Index; however, an individual can invest in exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index.
The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company and may be obtained by calling 1-877-336-6763. Please read it carefully before investing.
The Fund is distributed by Unified Financial Securities, Inc., Member FINRA.
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Fund Holdings – (Unaudited)
Sector Exposure (11/30/2013)
(Based on Net Assets)
| Long | Short | Gross | Net | |||||||||||||
Consumer Discretionary | 21.56 | % | -2.92 | % | 24.48 | % | 18.64 | % | ||||||||
Consumer Staples | 4.40 | % | -3.25 | % | 7.65 | % | 1.15 | % | ||||||||
Energy | 7.03 | % | -3.21 | % | 10.24 | % | 3.82 | % | ||||||||
Financials | 10.00 | % | -1.58 | % | 11.58 | % | 8.42 | % | ||||||||
Health Care | 18.17 | % | -4.74 | % | 22.91 | % | 13.43 | % | ||||||||
Industrials | 13.32 | % | -3.58 | % | 16.90 | % | 9.74 | % | ||||||||
Information Technology | 8.30 | % | -4.57 | % | 12.87 | % | 3.73 | % | ||||||||
Materials | 2.47 | % | 0.00 | % | 2.47 | % | 2.47 | % | ||||||||
Real Estate Investment Trusts | 0.00 | % | -1.16 | % | 1.16 | % | -1.16 | % | ||||||||
Unclassified | 0.00 | % | -3.12 | % | 3.12 | % | -3.12 | % | ||||||||
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Total | 85.25 | % | -28.13 | % | 113.38 | % | 57.12 | % | ||||||||
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The LS Opportunity Fund (“Fund”) seeks to generate long term capital appreciation by investing in both long and short positions within a portfolio consisting of primarily publicly-traded common stock, with less risk than that of the stock market in general.
Availability of Portfolio Schedule – (Unaudited)
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q is available at the SEC’s website at www.sec.gov. The Forms N-Q may be reviewed and copied at the Public Reference Room in Washington DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
About The Fund’s Expenses – (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs (such as short-term redemption fees); 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 June 1, 2013 to November 30, 2013.
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
14
amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.60), 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 this 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 ratios 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 the 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), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing 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 would have been higher.
| LS Opportunity Fund | Beginning May 31, 2013 | Ending Account Value November 30, 2013 | Expenses Paid During the Period Ended November 30, 2013* | |||||||||
Actual | $ | 1,000.00 | $ | 1,112.10 | $ | 14.18 | ||||||
Hypothetical ** (5% return before expenses) | $ | 1,000.00 | $ | 1,011.64 | $ | 13.50 | ||||||
| * | Expenses are equal to the Fund’s annualized expense ratio of 2.83%, multiplied by the average account value over the period, multiplied by 183/365. |
| ** | Assumes a 5% return before expenses. |
15
LS Opportunity Fund
Schedule of Investments
November 30, 2013 (Unaudited)
| Common Stocks – Long – Domestic – 72.96% | Shares | Fair Value | ||||||
Consumer Discretionary – 18.01% | ||||||||
Caesars Acquisition Co. – Class A* | 29,574 | $ | 359,620 | |||||
Charter Communications, Inc. – Class A(a)* | 11,184 | 1,510,958 | ||||||
Deckers Outdoor Corp.* | 16,072 | 1,328,190 | ||||||
Diamond Resorts International, Inc.* | 18,359 | 328,075 | ||||||
Extended Stay America, Inc.* | 18,815 | 473,762 | ||||||
Las Vegas Sands Corp.(a) | 25,382 | 1,819,382 | ||||||
Liberty Media Corp. – Class A(a)* | 25,694 | 3,943,001 | ||||||
LIN Media LLC* | 18,777 | 490,831 | ||||||
Madison Square Garden Co. / The – Class A(a)* | 21,124 | 1,190,549 | ||||||
Nexstar Broadcasting Group, Inc. | 11,792 | 585,709 | ||||||
Tribune Co.* | 20,369 | 1,517,491 | ||||||
|
| |||||||
| 13,547,568 | ||||||||
|
| |||||||
Consumer Staples – 4.40% | ||||||||
Green Mountain Coffee Roasters, Inc.* | 5,377 | 362,302 | ||||||
Mead Johnson Nutrition Co.(a) | 27,736 | 2,343,969 | ||||||
WhiteWave Food Co. / The – Class A* | 28,360 | 603,217 | ||||||
|
| |||||||
| 3,309,488 | ||||||||
|
| |||||||
Energy – 7.03% | ||||||||
Anadarko Petroleum Corp. | 9,621 | 854,537 | ||||||
Cimarex Energy Co. | 8,047 | 761,085 | ||||||
Pioneer Natural Resources Co.(a) | 4,558 | 810,185 | ||||||
Schlumberger Ltd.(a) | 21,371 | 1,889,624 | ||||||
Tesoro Corp. | 16,543 | 969,916 | ||||||
|
| |||||||
| 5,285,347 | ||||||||
|
| |||||||
Financials – 5.48% | ||||||||
Ocwen Financial Corp.(a)* | 72,786 | 4,124,055 | ||||||
|
| |||||||
Health Care – 18.17% | ||||||||
AcelRx Pharmaceuticals, Inc.* | 52,149 | 510,017 | ||||||
Aetna, Inc. | 21,525 | 1,483,718 | ||||||
Celgene Corp.(a)* | 17,686 | 2,861,064 | ||||||
DaVita, Inc.* | 10,749 | 640,103 | ||||||
Endo Health Solutions, Inc.(a)* | 32,979 | 2,215,859 | ||||||
Gilead Sciences, Inc.(a)* | 30,285 | 2,265,621 | ||||||
Insmed, Inc.(a)* | 27,695 | 448,659 | ||||||
Ophthotech Corp.(a)* | 41,965 | 1,185,511 | ||||||
See accompanying notes which are an integral part of these financial statements.
16
LS Opportunity Fund
Schedule of Investments — continued
November 30, 2013 (Unaudited)
| Common Stocks – Long – Domestic – 72.96% – continued | Shares | Fair Value | ||||||
Health Care – 18.17% – continued | ||||||||
Surgical Care Affiliates, Inc.* | 9,425 | $ | 286,897 | |||||
Zeltiq Aesthetics, Inc.* | 10,343 | 181,416 | ||||||
Zoetis, Inc. | 50,831 | 1,583,386 | ||||||
|
| |||||||
| 13,662,251 | ||||||||
|
| |||||||
Industrials – 9.10% | ||||||||
Alliant Techsystems, Inc.(a) | 17,558 | 2,128,556 | ||||||
Delta Air Lines, Inc.(a) | 41,104 | 1,191,194 | ||||||
Donaldson Co., Inc. | 15,554 | 649,068 | ||||||
Towers Watson & Co. – Class A | 13,571 | 1,528,095 | ||||||
TransDigm Group, Inc. | 2,496 | 390,674 | ||||||
Xylem, Inc. | 27,589 | 953,476 | ||||||
|
| |||||||
| 6,841,063 | ||||||||
|
| |||||||
Information Technology – 8.30% | ||||||||
Aspen Technology, Inc.* | 16,972 | 670,903 | ||||||
Global Eagle Entertainment, Inc.* | 2,795 | 42,903 | ||||||
MasterCard, Inc. – Class A | 2,822 | 2,147,006 | ||||||
Proofpoint, Inc.* | 11,154 | 340,197 | ||||||
QUALCOMM, Inc.(a) | 29,931 | 2,202,323 | ||||||
Yahoo!, Inc.* | 22,620 | 836,488 | ||||||
|
| |||||||
| 6,239,820 | ||||||||
|
| |||||||
Materials – 2.47% | ||||||||
Eagle Materials, Inc. | 5,331 | 415,818 | ||||||
Ecolab, Inc.(a) | 13,431 | 1,439,400 | ||||||
|
| |||||||
| 1,855,218 | ||||||||
|
| |||||||
TOTAL COMMON STOCKS – LONG – DOMESTIC | 54,864,810 | |||||||
|
| |||||||
Common Stocks – Long – International – 12.29% | ||||||||
Consumer Discretionary – 3.55% | ||||||||
Liberty Global PLC – Class A(a)* | 31,109 | 2,669,463 | ||||||
|
| |||||||
Financials – 4.52% | ||||||||
Altisource Portfolio Solutions SA* | 10,950 | 1,762,731 | ||||||
Altisource Residential Corp.(a)* | 58,616 | 1,632,456 | ||||||
|
| |||||||
| 3,395,187 | ||||||||
|
| |||||||
See accompanying notes which are an integral part of these financial statements.
17
LS Opportunity Fund
Schedule of Investments — continued
November 30, 2013 (Unaudited)
| Common Stocks – Long – International – 12.29% – continued | Shares | Fair Value | ||||||
Industrials – 4.22% | ||||||||
Chicago Bridge & Iron Co. NV(a) | 41,405 | $ | 3,174,935 | |||||
|
| |||||||
TOTAL COMMON STOCKS – LONG – INTERNATIONAL (Cost $7,231,886) | 9,239,585 | |||||||
|
| |||||||
TOTAL INVESTMENTS – LONG – 85.25% | 64,104,395 | |||||||
|
| |||||||
Total Securities Sold Short – (28.13%) | (21,156,676 | ) | ||||||
|
| |||||||
Other Assets in Excess of Liabilities – 42.88% | 11,092,915 | |||||||
|
| |||||||
TOTAL NET ASSETS – 100.00% | $ | 75,197,310 | ||||||
|
| |||||||
| (a) | All or a portion of the security is held as collateral for securities sold short. The total fair value of this collateral on November 30, 2013 was $27,715,656. |
| * | Non-income producing security. |
See accompanying notes which are an integral part of these financial statements.
18
LS Opportunity Fund
Schedule of Securities Sold Short
November 30, 2013 (Unaudited)
| Common Stocks – Short – Domestic – (21.59%) | Shares | Fair Value | ||||||
Consumer Discretionary – (2.92%) | ||||||||
Caesars Entertainment Corp.* | (18,097 | ) | $ | (369,903 | ) | |||
McDonalds Corp. | (13,608 | ) | (1,325,011 | ) | ||||
Sinclair Broadcast Group, Inc. | (11,098 | ) | (364,236 | ) | ||||
Tesla Motors, Inc.* | (1,083 | ) | (137,844 | ) | ||||
|
| |||||||
| (2,196,994 | ) | |||||||
|
| |||||||
Consumer Staples – (3.25%) | ||||||||
Dean Foods Co. | (3,598 | ) | (64,692 | ) | ||||
Fresh Market, Inc. / The* | (7,238 | ) | (294,659 | ) | ||||
Hershey Co. / The | (5,407 | ) | (523,884 | ) | ||||
Procter & Gamble Co. | (6,197 | ) | (521,911 | ) | ||||
Sprouts Farmers Market, Inc.* | (7,238 | ) | (273,886 | ) | ||||
Sysco Corp. | (10,531 | ) | (354,157 | ) | ||||
Whole Foods Market, Inc. | (7,238 | ) | (409,671 | ) | ||||
|
| |||||||
| (2,442,860 | ) | |||||||
|
| |||||||
Energy – (1.30%) | ||||||||
Apache Corp. | (7,195 | ) | (658,271 | ) | ||||
ConocoPhillips | (4,431 | ) | (322,577 | ) | ||||
|
| |||||||
| (980,848 | ) | |||||||
|
| |||||||
Financials – (1.58%) | ||||||||
First American Financial Corp. | (9,066 | ) | (239,886 | ) | ||||
SunTrust Banks, Inc. | (9,839 | ) | (356,467 | ) | ||||
Wells Fargo & Co. | (13,529 | ) | (595,547 | ) | ||||
|
| |||||||
| (1,191,900 | ) | |||||||
|
| |||||||
Health Care – (4.20%) | ||||||||
Amgen, Inc. | (3,952 | ) | (450,844 | ) | ||||
IDEXX Laboratories, Inc.* | (3,722 | ) | (387,683 | ) | ||||
Intuitive Surgical, Inc.* | (1,393 | ) | (525,022 | ) | ||||
Laboratory Corp. of America Holdings* | (11,232 | ) | (1,143,979 | ) | ||||
ResMed, Inc. | (13,283 | ) | (648,343 | ) | ||||
|
| |||||||
| (3,155,871 | ) | |||||||
|
| |||||||
Industrials – (2.94%) | ||||||||
ADT Corp. / The | (6,593 | ) | (267,412 | ) | ||||
Caterpillar, Inc. | (9,296 | ) | (786,442 | ) | ||||
See accompanying notes which are an integral part of these financial statements.
19
LS Opportunity Fund
Schedule of Securities Sold Short – continued
November 30, 2013 (Unaudited)
| Common Stocks – Short – Domestic – (21.59%) –continued | Shares | Fair Value | ||||||
Industrials – (2.94%) – continued | ||||||||
Deere & Co. | (4,856 | ) | $ | (409,069 | ) | |||
Fluor Corp. | (9,657 | ) | (751,411 | ) | ||||
|
| |||||||
| (2,214,334 | ) | |||||||
|
| |||||||
Information Technology – (4.24%) | ||||||||
EMC Corp. | (10,744 | ) | (256,244 | ) | ||||
Hewlett-Packard Co. | (3,608 | ) | (98,679 | ) | ||||
International Business Machines Corp. | (7,435 | ) | (1,335,921 | ) | ||||
Itron, Inc.* | (7,468 | ) | (316,270 | ) | ||||
Rackspace Hosting, Inc.* | (7,238 | ) | (276,564 | ) | ||||
Teradata Corp.* | (13,231 | ) | (603,863 | ) | ||||
Twitter, Inc.* | (7,223 | ) | (300,260 | ) | ||||
|
| |||||||
| (3,187,801 | ) | |||||||
|
| |||||||
Real Estate Investment Trusts – (1.16%) | ||||||||
AvalonBay Communities, Inc. | (7,330 | ) | (869,045 | ) | ||||
|
| |||||||
TOTAL COMMON STOCKS – SHORT – DOMESTIC | (16,239,653 | ) | ||||||
|
| |||||||
| Common Stocks – Short – International – (3.42%) | ||||||||
Energy – (1.91%) | ||||||||
Royal Dutch Shell PLC ADR | (21,550 | ) | (1,437,385 | ) | ||||
|
| |||||||
Health Care – (0.54%) | ||||||||
Teva Pharmaceutical Industries Ltd. ADR | (9,903 | ) | (403,646 | ) | ||||
|
| |||||||
Industrials – (0.64%) | ||||||||
Canadian Pacific Railway Ltd. | (3,136 | ) | (482,568 | ) | ||||
|
| |||||||
Information Technology – (0.33%) | ||||||||
MercadoLibre, Inc. | (2,236 | ) | (247,548 | ) | ||||
|
| |||||||
TOTAL COMMON STOCKS – SHORT – INTERNATIONAL (Proceeds Received $2,526,785) | (2,571,147 | ) | ||||||
|
| |||||||
See accompanying notes which are an integral part of these financial statements.
20
LS Opportunity Fund
Schedule of Securities Sold Short – continued
November 30, 2013 (Unaudited)
| Exchange-Traded Funds – Short – (3.12%) | Shares | Fair Value | ||||||
SPDR Dow Jones Industrial Average ETF Trust | (4,555 | ) | $ | (732,080 | ) | |||
SPDR S&P 500 ETF Trust | (8,916 | ) | (1,613,796 | ) | ||||
|
| |||||||
TOTAL EXCHANGE-TRADED FUNDS – SHORT | (2,345,876 | ) | ||||||
|
| |||||||
TOTAL SECURITIES SOLD SHORT – (28.13%) | $ | (21,156,676 | ) | |||||
|
| |||||||
| * | Non-income producing security. |
| ADR | — American Depositary Receipt |
See accompanying notes which are an integral part of these financial statements.
21
LS Opportunity Fund
Statement of Assets and Liabilities
November 30, 2013
(Unaudited)
Assets | ||||
Investments in securities at fair value (cost $53,743,632) | $ | 64,104,395 | ||
Cash(a) | 31,335,823 | |||
Foreign currencies, at value (Cost $197) | 280 | |||
Receivable for fund shares sold | 154,179 | |||
Receivable for investments sold | 2,502,742 | |||
Dividends receivable | 21,948 | |||
Tax reclaims receivable | 2,401 | |||
Prepaid expenses | 10,015 | |||
|
| |||
Total Assets | 98,131,783 | |||
|
| |||
Liabilities | ||||
Investment securities sold short, at value (proceeds $20,532,706) | 21,156,676 | |||
Payable for fund shares redeemed | 4,082 | |||
Payable for investments purchased | 1,575,924 | |||
Dividend expense payable on short positions | 64,643 | |||
Payable to Adviser | 90,614 | |||
Payable to administrator, fund accountant, and transfer agent | 17,543 | |||
Payable to custodian | 8,448 | |||
Payable to trustees | 685 | |||
Other accrued expenses | 15,858 | |||
|
| |||
Total Liabilities | 22,934,473 | |||
|
| |||
Net Assets | $ | 75,197,310 | ||
|
| |||
Net Assets consist of: | ||||
Paid-in capital | $ | 63,778,813 | ||
Accumulated undistributed net investment (loss) | (820,480 | ) | ||
Accumulated undistributed net realized gain from investments | 2,502,101 | |||
Net unrealized appreciation on: | ||||
Investment securities and short securities | 9,736,793 | |||
Foreign currency | 83 | |||
|
| |||
Net Assets | $ | 75,197,310 | ||
|
| |||
Shares outstanding (unlimited number of shares authorized, no par value) | 5,617,395 | |||
|
| |||
Net asset value (“NAV”) and offering price per share | $ | 13.39 | ||
|
| |||
Redemption price per share (NAV * 98%)(b) | $ | 13.12 | ||
|
| |||
| (a) | See Note 2 in the Notes to Financial Statements regarding restricted cash. |
| (b) | The redemption price per share reflects a redemption fee of 2.00% on shares redeemed within 60 calendar days of purchase. |
See accompanying notes which are an integral part of these financial statements.
22
LS Opportunity Fund
Statement of Operations
For the six months ended November 30, 2013
(Unaudited)
Investment Income | ||||
Dividend income (net of foreign taxes withheld of $703) | $ | 133,697 | ||
|
| |||
Total investment income | 133,697 | |||
|
| |||
Expenses | ||||
Investment Adviser | 448,906 | |||
Administration | 17,621 | |||
Fund accounting | 19,916 | |||
Transfer agent | 19,170 | |||
Legal | 7,667 | |||
Registration | 12,973 | |||
Custodian | 22,419 | |||
Audit | 7,520 | |||
Trustee | 2,987 | |||
Insurance | 2,538 | |||
Pricing | 1,447 | |||
Printing | 9,580 | |||
CCO | 1,698 | |||
Miscellaneous | 1,654 | |||
Other – short sale & interest expense | 33,395 | |||
Dividend expense on securities sold short | 154,014 | |||
|
| |||
Total expenses | 763,505 | |||
Fees waived by Adviser | (73,895 | ) | ||
|
| |||
Net operating expenses | 689,610 | |||
|
| |||
Net investment loss | (555,913 | ) | ||
|
| |||
Net Realized and Unrealized Gain | ||||
Net realized gain (loss) on: | ||||
Investment securities | 3,685,792 | |||
Short securities | (1,653,505 | ) | ||
Options | (10,968 | ) | ||
Foreign currency | 252 | |||
Foreign currency exchange contracts | (348 | ) | ||
Change in unrealized appreciation/(depreciation) on: | ||||
Investment securities | 4,017,279 | |||
Short securities | 214,530 | |||
Foreign currency | 152 | |||
Foreign currency exchange contracts | 224 | |||
|
| |||
Net realized and unrealized gain on investments, short securities, options, foreign currency and foreign currency contracts | 6,253,408 | |||
|
| |||
Net increase in net assets resulting from operations | $ | 5,697,495 | ||
|
|
See accompanying notes which are an integral part of these financial statements.
23
LS Opportunity Fund
Statements of Changes in Net Assets
| For the Six Months Ended November 30, 2013 (Unaudited) | For the Year Ended May 31, 2013 | |||||||
Increase (Decrease) in Net Assets due to: | ||||||||
Operations | ||||||||
Net investment loss | $ | (555,913 | ) | $ | (975,767 | ) | ||
Net realized gain on investment securities, short securities, options, foreign currency, and foreign currency exchange contracts | 2,021,223 | 4,555,796 | ||||||
Net change in unrealized appreciation on investment securities, short securities, options, foreign currency, and foreign currency exchange contracts | 4,232,185 | 3,068,036 | ||||||
|
|
|
| |||||
Net increase in net assets resulting from operations | 5,697,495 | 6,648,065 | ||||||
|
|
|
| |||||
Capital Transactions | ||||||||
Proceeds from shares sold | 38,680,326 | 6,410,364 | ||||||
Amount paid for shares redeemed | (6,935,672 | ) | (24,173,841 | ) | ||||
Proceeds from redemption fees | 5,265 | 1,289 | ||||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from capital transactions | 31,749,919 | (17,762,188 | ) | |||||
|
|
|
| |||||
Total Increase (Decrease) in Net Assets | 37,447,414 | (11,114,123 | ) | |||||
|
|
|
| |||||
Net Assets | ||||||||
Beginning of period | 37,749,896 | 48,864,019 | ||||||
|
|
|
| |||||
End of period | $ | 75,197,310 | $ | 37,749,896 | ||||
|
|
|
| |||||
Accumulated net investment loss included in net assets at end of period | $ | (820,480 | ) | $ | (264,567 | ) | ||
|
|
|
| |||||
Share Transactions | ||||||||
Shares sold | 3,041,569 | 596,033 | ||||||
Shares redeemed | (558,818 | ) | (2,209,670 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in share transactions | 2,482,751 | (1,613,637 | ) | |||||
|
|
|
| |||||
See accompanying notes which are an integral part of these financial statements.
24
LS Opportunity Fund
Financial Highlights
(For a share outstanding during each period)
| For the Six Months Ended November 30, 2013 (Unaudited) | For the Fiscal Year Ended May 31, 2013 | For the Fiscal Year Ended May 31, 2012 | For the Period Ended May 31, 2011(a) | |||||||||||||
Selected Per Share Data: | ||||||||||||||||
Net asset value, beginning of period | $ | 12.04 | $ | 10.29 | $ | 11.45 | $ | 10.00 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Income from investment operations: | ||||||||||||||||
Net investment income (loss)(b) | (0.14 | ) | (0.24 | ) | (0.23 | ) | (0.17 | ) | ||||||||
Net realized and unrealized gain (loss) on investments | 1.49 | 1.99 | (0.91 | ) | 1.62 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total from investment operations | 1.35 | 1.75 | (1.14 | ) | 1.45 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Less Distributions to Shareholders: | ||||||||||||||||
From net realized gains | — | — | (0.02 | ) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Redemption fees(c) | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net asset value, end of period | $ | 13.39 | $ | 12.04 | $ | 10.29 | $ | 11.45 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Return(d)(e) | 11.21 | %(f) | 17.01 | % | (9.92 | )% | 14.50 | %(f) | ||||||||
Ratios and Supplemental Data: | ||||||||||||||||
Net assets, end of period (000) | $ | 75,197 | $ | 37,750 | $ | 48,864 | $ | 20,375 | ||||||||
Ratio of expenses to average net assets | 2.68 | %(g)(h) | 3.12 | %(i)(j) | 3.16 | %(i) | 2.99 | %(g)(i) | ||||||||
Ratio of expenses to average net assets before waiver and reimbursement/recoupment by Adviser | 2.96 | %(g)(h) | 3.12 | %(i) | 3.06 | %(i) | 4.25 | %(g)(i) | ||||||||
Ratio of net investment loss to average net assets | (2.16 | )%(g) | (2.22 | )% | (2.19 | )% | (2.25 | )%(g) | ||||||||
Portfolio turnover rate | 142.37 | %(f) | 310.57 | % | 444.62 | % | 199.48 | %(f) | ||||||||
| (a) | For the period September 30, 2010 (Commencement of Operations) through May 31, 2011. |
| (b) | Per share net investment loss has been calculated using the average shares method. |
| (c) | Amount represents less than $0.005 per share. |
| (d) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends. |
| (e) | Excludes redemption fee. |
| (f) | Not Annualized |
| (g) | Annualized |
| (h) | Includes dividend and interest expense of 0.73% for the six months ended November 30, 2013. |
| (i) | Includes dividend and interest expense of 0.77%, 0.66%, and 0.49% for periods ended May 31, 2013, 2012 and 2011, respectively. |
| (j) | Effective February 4, 2013, the Adviser agreed to waive fees to maintain Fund expenses at 1.95%. Prior to that date, the expense cap was 2.50%. (See Note 5. Fees and Other Transactions with Affiliates) |
See accompanying notes which are an integral part of these financial statements.
25
LS Opportunity Fund
Notes to the Financial Statements
November 30, 2013
(Unaudited)
NOTE 1. ORGANIZATION
The LS Opportunity Fund (the “Fund”) is an open-end, non-diversified series of the Valued Advisers Trust (the “Trust”). The Trust is a management investment company established under the laws of Delaware by an Agreement and Declaration of Trust dated June 13, 2008 (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 authorized by the Board of Trustees (the “Board”). The Fund’s investment adviser is Long Short Advisors, LLC (the “Adviser”). The Adviser has retained Independence Capital Asset Partners, LLC (the “Sub-Adviser”) to serve as sub-adviser to provide portfolio management and related services to the Fund. The Sub-Adviser receives a fee from the Adviser (not the Fund) for these services. The investment objective of the Fund is to generate long term capital appreciation by investing in both long and short positions within a portfolio consisting of primarily publicly-traded common stock, with less risk than that of the stock market in general.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.
Securities Valuation – All investments in securities are recorded at their estimated fair value as described in Note 3.
Federal Income Taxes – The Fund makes no provision for federal income or excise tax. The Fund intends to qualify each year as a “regulated investment company” (“RIC”) under subchapter M of the Internal Revenue Code of 1986, as amended, by complying with the requirements applicable to RICs and by distributing substantially all of its taxable income. The Fund also intends to distribute sufficient net investment income and net capital gains, if any, so that it will not be subject to excise tax on undistributed income and gains. If the required amount of net investment income or gains is not distributed, the Fund could incur a tax expense.
As of and during the period ended November 30, 2013, 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 period, the Fund did not incur any interest or penalties. The Fund is subject to examination by U.S. federal tax authorities for all tax years since inception.
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LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2013
(Unaudited)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued
Expenses – Expenses incurred by the Trust that do not relate to a specific fund of the Trust are allocated to the individual funds based on each fund’s relative net assets or other appropriate basis (as determined by the Board).
Security Transactions and Related Income – The Fund follows industry practice and records security transactions on the trade date for financial reporting purposes. The Last In, First Out method is used for determining gains or losses for financial statements and income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Distributions from Limited Partnerships are recognized on the ex-date. Income or loss from Limited Partnerships is reclassified in the components of net assets upon receipt of Schedules K-1 (Form 1065). Discounts and premiums on securities purchased are amortized or accreted using the effective interest method. Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates.
Redemption Fees – The Fund charges a 2.00% redemption fee for shares redeemed within 60 days. These fees are deducted from the redemption proceeds otherwise payable to the shareholder. The Fund will retain the fee charged as an increase in paid-in capital and such fees become part of the Fund’s daily NAV calculation.
Foreign Currency Translations – Foreign currency amounts are translated into U.S. dollars as follows: (i) assets and liabilities at the rate of exchange at the end of the respective period; and (ii) purchases and sales of securities and income and expenses at the rate of exchange prevailing on the dates of such transactions. The portion of the results of operations arising from changes in the exchange rates and the portion due to fluctuations arising from changes in the market prices of securities are not isolated. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
The Fund may enter into transactions to purchase or sell foreign currencies to protect the U.S. dollar value of its underlying portfolio securities against the effect of possible adverse movements in foreign exchange rates. Principal risks associated with such transactions include the movement in value of the foreign currency relative to the U.S. dollar and the ability of the counterparty to perform. Fluctuations in the value of such forward currency transactions are recorded daily as unrealized gain or loss; realized gain or loss includes net gain or loss on transactions that have terminated by settlement or by a fund entering into offsetting commitments. Reported net realized foreign exchange gains or losses arise from sales of foreign
27
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2013
(Unaudited)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued
currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the company’s books and the U.S. dollar equivalent of the amounts actually received or paid. These instruments involve market risk, credit risk, or both kinds of risks, in excess of the amount recognized in the Statement of Assets and Liabilities. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movement in currency and securities values and interest rates.
Dividends and Distributions – The Fund intends to distribute substantially all of its net investment income, net realized long-term capital gains and its net realized short-term capital gains, if any, to its shareholders on at least an annual basis. Dividends to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications will have no effect on net assets, results of operations or net asset value per share of the Fund.
Short Sales – The Fund may make short sales as part of its overall portfolio management strategies or to offset a potential decline in value of a security. The Fund may engage in short sales with respect to various types of securities, including Exchange Traded Funds (ETFs). A short sale involves the sale of a security that is borrowed from a broker or other institution to complete the sale. The Fund may engage in short sales with respect to securities it owns, as well as securities that it does not own. Short sales expose the Fund to the risk that it will be required to acquire, convert or exchange securities to replace the borrowed securities (also known as “covering” the short position) at a time when the securities sold short have appreciated in value, thus resulting in a loss to the Fund. The Fund’s investment performance may also suffer if the Fund is required to close out a short position earlier than it had intended. The Fund must segregate assets determined to be liquid in accordance with procedures established by the Board of Trustees, or otherwise cover its position in a permissible manner. The Fund will be required to pledge its liquid assets to the broker in order to secure its performance on short
28
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2013
(Unaudited)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued
sales. As a result, the assets pledged may not be available to meet the Fund’s needs for immediate cash or other liquidity. In addition, the Fund may be subject to expenses related to short sales that are not typically associated with investing in securities directly, such as costs of borrowing and margin account maintenance costs associated with the Fund’s open short positions. These types of short sales expenses are sometimes referred to as the “negative cost of carry,” and will tend to cause the Fund to lose money on a short sale even in instances where the price of the underlying security sold short does not change over the duration of the short sale. Dividend expenses on securities sold short and borrowing costs are not covered under the Adviser’s expense limitation agreement with the Fund and, therefore, these expenses will be borne by the shareholders of the Fund. The amount of restricted cash held at the broker as collateral for securities sold short was $15,082,713 as of November 30, 2013.
Purchasing Call Options – The Fund may purchase call options. As the holder of a call option, the Fund has the right to purchase the underlying security at the exercise price at any time during the option period. The Fund may enter into closing sale transactions with respect to such options, exercise them or permit them to expire. The Fund may also purchase call options on relevant stock indexes. Call options may also be purchased by the Fund for the purpose of acquiring the underlying securities for its portfolio. Utilized in this fashion, the purchase of call options enables the Fund to acquire the securities at the exercise price of the call option plus the premium paid. At times the net cost of acquiring securities in this manner may be less than the cost of acquiring the securities directly. This technique may also be useful to the Fund in purchasing a large block of securities that would be more difficult to acquire by direct market purchases. So long as it holds such a call option rather than the underlying security itself, the Fund is partially protected from any unexpected decline in the market price of the underlying security and in such event could allow the call option to expire, incurring a loss only to the extent of the premium paid for the option. See Note 4 for additional disclosures.
Purchasing Put Options – The Fund may purchase put options. As the holder of a put option, the Fund has the right to sell the underlying security at the exercise price at any time during the option period. The Fund may enter into closing sale transactions with respect to such options, exercise them or permit them to expire. The Fund may purchase a put option on an underlying security (a “protective put”) owned as a defensive technique to protect against an anticipated decline in the value of the security. Such hedge protection is provided only during the life of the put option when the Fund, as the holder of the put option, is able to sell the
29
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2013
(Unaudited)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued
underlying security at the put exercise price regardless of any decline in the underlying security’s market price. The Fund may also purchase put options at a time when it does not own the underlying security. By purchasing put options on a security it does not own, the Fund seeks to benefit from a decline in the market price of the underlying security. If the put option is not sold when it has remaining value, and if the market price of the underlying security remains equal to or greater than the exercise price during the life of the put option, the Fund will lose its entire investment in the put option. In order for the purchase of a put option to be profitable, the market price of the underlying security must decline sufficiently below the exercise price to cover the premium and transaction costs, unless the put option is sold in a closing sale transaction. See Note 4 for additional disclosures.
Writing Options – The Fund may write covered call options on equity securities or futures contracts that the Fund is eligible to purchase to extend a holding period to obtain long-term capital gain treatment, to earn premium income, to assure a definite price for a security it has considered selling, or to close out options previously purchased. The Fund may write covered call options if, immediately thereafter, not more than 30% of its net assets would be committed to such transactions. A call option gives the holder (buyer) the right to purchase a security or futures contract at a specified price (the exercise price) at any time until a certain date (the expiration date). A call option is “covered” if the Fund owns the underlying security subject to the call option at all times during the option period. When the Fund writes a covered call option, it maintains a segregated account with its Custodian, cash or liquid portfolio securities in an amount not less than the exercise price at all times while the option is outstanding.
Forward Currency Exchange Contracts – The Fund may engage in foreign currency exchange transactions. The value of the Fund’s portfolio securities that are invested in non-U.S. dollar denominated instruments as measured in U.S. dollars may be affected favorably or unfavorably by changes in foreign currency exchange rates, and the Fund may incur costs in connection with conversions between various currencies. The Fund will conduct its foreign currency exchange transactions either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market, or through forward contracts to purchase or sell foreign currencies. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded directly between currency traders (usually large commercial banks) and their customers. The Fund will not, however,
30
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2013
(Unaudited)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued
hold foreign currency except in connection with the purchase and sale of foreign portfolio securities. The Fund has engaged in foreign currency exchange transactions for the purpose of hedging as a defensive measure. See Note 4 for additional disclosures.
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS
Fair value is defined as the price that a Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. Generally Accepted Accounting Principles (“GAAP”) establishes a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes.
Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk (the risk inherent in a particular valuation technique used to measure fair value such as pricing model and/or the risk inherent in the inputs to the valuation technique). Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.
| • | Level 1 – quoted prices in active markets for identical securities |
| • | Level 2 – other significant observable inputs (including, but not limited to, quoted prices for an identical security in an inactive market, quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
| • | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining fair value of investments based on the best information available) |
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value
31
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2013
(Unaudited)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – continued
hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Equity securities, including common stock, investment companies, real estate investment trusts, and american depositary receipts are generally valued by using market quotations, furnished by a pricing service. Securities that are traded on any stock exchange are generally valued at the last quoted sale price. Lacking a last sale price, an exchange traded security is generally valued at its last bid price. Securities traded in the NASDAQ over-the-counter market are generally valued at the NASDAQ Official Closing Price. When using the market quotations or close prices provided by the pricing service and when the market is considered active, the security is classified as a Level 1 security. Sometimes, an equity security owned by the Fund will be valued by the pricing service with factors other than market quotations or when the market is considered inactive. When this happens, the security is classified as a Level 2 security. When market quotations are not readily available, when the Fund determines that the market quotation or the price provided by the pricing service does not accurately reflect the current fair value, or when restricted or illiquid securities are being valued, such securities are valued as determined in good faith by the Fund, in conformity with guidelines adopted by and subject to review by the Board. These securities are categorized as Level 3 securities.
Investments in mutual funds, including money market mutual funds, are generally priced at the ending net asset value (NAV) provided by the service agent of the funds. These securities are categorized as Level 1 securities.
Call and put options that the Fund invests in are generally traded on an exchange. The options in which the Fund invests are generally valued at the last trade price as provided by a pricing service. If the last sale price is not available, the options will be valued using the last bid price. The options will generally be categorized as Level 1 securities.
If the Fund decides that a price provided by the pricing service does not accurately reflect the fair value of the securities, when prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Fund, in conformity with guidelines adopted by and subject to review of the Board. These securities will be categorized as Level 3 securities.
32
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2013
(Unaudited)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – continued
Derivative instruments the Fund invests in, such as forward currency exchange contracts, are valued by a pricing service at the interpolated rates based on the prevailing banking rates and are generally categorized as Level 2 securities.
The following is a summary of the inputs used to value the Fund’s investments as of November 30, 2013:
| Valuation Inputs | ||||||||||||||||
| Assets | Level 1 Quoted Prices in Active Markets | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Total | ||||||||||||
Common Stocks* | $ | 64,104,395 | $ | — | $ | — | $ | 64,104,395 | ||||||||
Total | $ | 64,104,395 | $ | — | $ | — | $ | 64,104,395 | ||||||||
| * | Refer to Schedule of Investments for industry classifications |
| Valuation Inputs | ||||||||||||||||
| Liabilities | Level 1 Quoted Prices in Active Markets | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Total | ||||||||||||
Common Stocks* | $ | (18,810,800 | ) | $ | — | $ | — | $ | (18,810,800 | ) | ||||||
Investment Companies | (2,345,876 | ) | — | — | (2,345,876 | ) | ||||||||||
Total | $ | (21,156,676 | ) | $ | — | $ | — | $ | (21,156,676 | ) | ||||||
| * | Refer to Schedule of Securities Sold Short for industry classifications. |
The Fund did not hold any investments at any time during the reporting period in which significant unobservable inputs were used in determining fair value; therefore, no reconciliation of Level 3 securities is included for this reporting period. The Trust recognizes transfers between fair value hierarchy levels at the reporting period end. There were no transfers between any Levels for the period ended November 30, 2013.
NOTE 4. DERIVATIVE TRANSACTIONS
Long and short forward currency contracts are represented on the Statement of Assets and Liabilities under investments in securities at value, cash held at broker and receivable for forward currency contracts, respectively and on the Statement of Operations under net realized gain (loss) on investment securities and change in unrealized appreciation (depreciation) on options and forward currency exchange
33
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2013
(Unaudited)
NOTE 4. DERIVATIVE TRANSACTIONS – continued
contracts respectively. As of November 30, 2013, the Fund had no open forward currency contacts.
For the period ended November 30, 2013:
| Derivatives | Location of Gain (Loss) on Derivatives on Statements of Operations | Contracts Opened | Contracts Closed | Realized Gain (Loss) on Derivatives | Change in Unrealized Appreciation (Depreciation) on Derivatives | |||||||||||||
Foreign Exchange Risk: | ||||||||||||||||||
Long Forward Currency Exchange Contracts | Net realized and unrealized gain (loss) on Forward Currency Exchange Contracts | 3 | 5 | $ | 7,725 | $ | 9,059 | |||||||||||
Foreign Exchange Risk: | ||||||||||||||||||
Short Forward Currency Exchange Contracts | Net realized and unrealized gain (loss) on Forward Currency Exchange Contracts | 3 | 5 | $ | (8,073 | ) | $ | (8,835 | ) | |||||||||
Foreign Exchange Risk: | ||||||||||||||||||
Long Spot Forward Currency | Net realized and unrealized gain (loss) on Foreign Forward Currency Exchange Contracts | 3 | 3 | $ | 252 | $ | — | |||||||||||
Equity Risk: | ||||||||||||||||||
Call Options Purchased | Net realized and unrealized gain (loss) on options | 47 | 47 | $ | (7,310 | ) | $ | — | ||||||||||
Equity Risk: | ||||||||||||||||||
Call Options Written | Net realized and unrealized gain (loss) on options | 26 | 26 | $ | 12,697 | $ | — | |||||||||||
Equity Risk: | ||||||||||||||||||
Put Options Purchased | Net realized and unrealized gain (loss) on options | 148 | 148 | $ | 7,418 | $ | — | |||||||||||
Equity Risk: | ||||||||||||||||||
Put Options Written | Net realized and unrealized gain (loss) on options | 47 | 47 | $ | (23,773 | ) | $ | — | ||||||||||
34
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2013
(Unaudited)
NOTE 4. DERIVATIVE TRANSACTIONS – continued
Transactions in options written during the period ended November 30, 2013 were as follows:
| LS Opportunity Fund | ||||||||
| Number of Contracts | Premiums Received | |||||||
Written Options outstanding at May 31, 2013 | — | $ | — | |||||
Options written | 73 | 20,917 | ||||||
Options terminated in closing purchase transactions | (73 | ) | (20,917 | ) | ||||
|
|
|
| |||||
Options outstanding at November 30, 2013 | — | $ | — | |||||
|
|
|
| |||||
NOTE 5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Adviser, under the terms of the management agreement (the “Agreement”), manages the Fund’s investments. 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 1.75% of the Fund’s average net assets. For the period ended November 30, 2013, the Adviser earned a fee of $448,906 from the Fund before the recoupment described below.
The Adviser has contractually agreed to waive its management fee and/or reimburse certain Fund operating expenses (excluding interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with generally accepted accounting principles, other extraordinary expenses not incurred in the ordinary course of the Fund’s business, dividend expense on short sales, and expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement) so that total expenses do not exceed 1.95% of net assets through September 30, 2014. Prior to February 4, 2013, the Fund’s expense cap was 2.50%. For the period ended November 30, 2013, the Adviser waived fees of $73,895. At November 30, 2013, the Adviser was owed $90,614 from the Fund for advisory services. The waiver and/or reimbursement by the Adviser with respect to the Fund is subject to repayment by the Fund within the three fiscal years following the fiscal year in which that particular waiver and/or reimbursement occurred, provided that the Fund is able to make the repayment without exceeding the expense limitations
35
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2013
(Unaudited)
NOTE 5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES – continued
described above. The amount subject to repayment by the Fund pursuant to the aforementioned conditions at November 30, 2013 was:
Amount | Recoverable through May 31, | |||
$73,059 | 2014 | |||
73,895 | 2017 | |||
The Adviser has retained the Sub-Adviser to provide portfolio management and related services to the Fund. The Sub-Adviser receives a fee from the Adviser (not the Fund) for these services. The Trust retains Huntington Asset Services, Inc. (“HASI”), to manage the Fund’s business affairs and to provide the Fund with administrative services, including all regulatory reporting and necessary office equipment and personnel. For the period ended November 30, 2013, HASI earned fees of $17,621 for administrative services provided to the Fund. At November 30, 2013, the Fund owed HASI $4,962 for administrative services. Certain officers of the Trust are members of management and/or employees of HASI. A trustee of the Trust is a member of management of HASI. HASI operates as a wholly-owned subsidiary of Huntington Bancshares, Inc., the parent company of Unified Financial Securities, Inc. (the “Distributor”).
The Trust retains HASI to act as the Fund’s transfer agent and to provide fund accounting services. For the period ended November 30, 2013, HASI earned fees of $19,170 from the Fund for transfer agent services. For the period ended November 30, 2013, HASI earned fees of $19,916 from the Fund for fund accounting services. At November 30, 2013, the Fund owed HASI $5,575 for transfer agent services and $7,006 for fund accounting services.
The Distributor acts as the principal distributor of the Fund’s shares. There were no payments made to the Distributor by the Fund for the period ended November 30, 2013. An officer of the Trust is an officer of the Distributor and such person may be deemed to be an affiliate of the Distributor.
36
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2013
(Unaudited)
NOTE 6. INVESTMENT TRANSACTIONS
For the period ended November 30, 2013, purchases and sales of investment securities, other than short-term investments and short sale securities were as follows:
Purchases | ||||
U.S. Government Obligations | $ | — | ||
Other | 83,491,091 | |||
Sales | ||||
U.S. Government Obligations | $ | — | ||
Other | 62,493,371 |
NOTE 7. ESTIMATES
The preparation of financial statements in conformity with 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 increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
NOTE 8. FEDERAL TAX INFORMATION
The Fund did not make any distributions during the period ended November 30, 2013.
The tax characterization of distributions for the fiscal years ended May 31, 2013 and 2012 was as follows:
| 2013 | 2012 | |||||||
Distributions paid from: | ||||||||
Ordinary income | $ | — | $ | 104,580 | ||||
|
|
|
| |||||
| $ | — | $ | 104,580 | |||||
|
|
|
| |||||
37
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2013
(Unaudited)
NOTE 8. FEDERAL TAX INFORMATION – continued
At May 31, 2013, the components of distributable earnings on a tax basis were as follows:
Undistributed long-term capital gains | $ | 803,353 | ||
Accumulated capital and other losses | (252,970 | ) | ||
Unrealized appreciation/depreciation | 5,182,509 | |||
Other temporary differences | (11,890 | ) | ||
|
| |||
| $ | 5,721,002 | |||
|
|
The difference between book basis and tax basis unrealized appreciation is attributable to the tax deferral of wash losses.
Under current tax law, net investment losses and capital losses realized after October 31 of a Fund’s fiscal year may be deferred and treated as occurring on the first business day of the following fiscal year for tax purposes. The Fund deferred losses as follows:
| Late Year Ordinary Loss | Post-October Capital Losses | |||||||
LS Opportunity Fund | $ | 252,970 | $ | — | ||||
At November 30, 2013, the appreciation (depreciation) of investments, net of proceeds for investment securities sold short, for tax purposes excluding forward currency exchange contracts was as follows:
Gross Unrealized Appreciation | $ | 10,295,352 | ||
Gross Unrealized (Depreciation) | (881,034 | ) | ||
|
| |||
Net Unrealized Appreciation on Investments | $ | 9,414,318 | ||
|
|
At November 30, 2013, the aggregate cost of securities, net of proceeds for investment securities sold short, for federal income tax purposes, was $33,533,401.
NOTE 9. COMMITMENTS AND CONTINGENCIES
The Fund indemnifies its officers and trustees for certain liabilities that may arise from their performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of
38
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2013
(Unaudited)
NOTE 9. COMMITMENTS AND CONTINGENCIES – continued
representations and warranties 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.
NOTE 10. SUBSEQUENT EVENT
Management of the Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date these financial statements were issued. Based upon this evaluation, and at a Board meeting held December 9-11, 2013, Andrea N. Mullins was appointed to serve as Trustee to the Trust and Bryan W. Ashmus was appointed to serve as Principal Financial Officer and Treasurer. And effective January 15, 2014, Dr. Merwyn R. Vanderlind resigned as a Trustee of the Board.
39
PROXY VOTING
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted those proxies during the most recent twelve month period ended June 30, is available without charge upon request by (1) calling the Fund at (877) 336-6763 and (2) from Fund documents filed with the Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov.
TRUSTEES
R. Jeffrey Young, Chairman
Ira Cohen
Andrea N. Mullins
OFFICERS
R. Jeffrey Young, Principal Executive Officer and President
John C. Swhear, Chief Compliance Officer, AML Officer and Vice-President
Bryan W. Ashmus, Principal Financial Officer and Treasurer
Carol J. Highsmith, Vice President
Matthew J. Miller, Vice President
Heather Bonds, Secretary
INVESTMENT ADVISER
Long Short Advisors, LLC
1818 Market Street, 33rd Floor, Suite 3323
Philadelphia, PA 19103
DISTRIBUTOR
Unified Financial Securities, Inc.
2960 North Meridian Street, Suite 300
Indianapolis, IN 46208
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Cohen Fund Audit Services, Ltd.
1350 Euclid Avenue, Suite 800
Cleveland, OH 44115
LEGAL COUNSEL
The Law Offices of John H. Lively & Associates, Inc.,
A member firm of The 1940 Act Law GroupTM
11300 Tomahawk Creek Parkway, Ste. 310
Leawood, KS 66221
CUSTODIAN
Citibank, N.A.
388 Greenwich Street
New York, NY 10013
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT
Huntington Asset Services, Inc.
2960 North Meridian Street, Suite 300
Indianapolis, IN 46208
This report is intended only for the information of shareholders or those who have received the Fund’s prospectus which contains information about the Fund’s management fee and expenses. Please read the prospectus carefully before investing.
Distributed by Unified Financial Securities, Inc.
Member FINRA/SIPC
40
PRIVACY POLICY
The following is a description of the Fund’s policies regarding disclosure of nonpublic personal information that you provide to the Fund or that the Fund collects from other sources. In the event that you hold shares of the Fund through a broker-dealer or other financial intermediary, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared with nonaffiliated third parties.
Categories of Information the Fund Collects. The Fund collects the following nonpublic personal information about you:
| • | Information the Fund receives from you on applications or other forms, correspondence, or conversations (such as your name, address, phone number, social security number, and date of birth); and |
| • | Information about your transactions with the Fund, its affiliates, or others (such as your account number and balance, payment history, cost basis information, and other financial information). |
Categories of Information the Fund Discloses. The Fund does not disclose any nonpublic personal information about its current or former shareholders to unaffiliated third parties, except as required or permitted by law. The Fund is permitted by law to disclose all of the information it collects, as described above, to service providers (such as the Fund’s custodian, administrator, transfer agent, accountant and legal counsel) to process your transactions and otherwise provide services to you.
Confidentiality and Security. The Fund restricts access to your nonpublic personal information to those persons who require such information to provide products or services to you. The Fund maintains physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Disposal of Information. The Fund, through its transfer agent, has taken steps to reasonably ensure that the privacy of your nonpublic personal information is maintained at all times, including in connection with the disposal of information that is no longer required to be maintained by the Fund. Such steps shall include, whenever possible, shredding paper documents and records prior to disposal, requiring off-site storage vendors to shred documents maintained in such locations prior to disposal, and erasing and/or obliterating any data contained on electronic media in such a manner that the information can no longer be read or reconstructed.
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Item 2. Code of Ethics. NOT APPLICABLE – disclosed with annual report
Item 3. Audit Committee Financial Expert. NOT APPLICABLE – disclosed with annual report
Item 4. Principal Accountant Fees and Services. NOT APPLICABLE – disclosed with annual report
Item 5. Audit Committee of Listed Companies. NOT APPLICABLE – applies to listed companies only
Item 6. Schedule of Investments. Schedules filed with Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. NOT APPLICABLE – applies to closed-end funds only
Item 8. Portfolio Managers of Closed-End Investment Companies. NOT APPLICABLE – applies to closed-end funds only
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. NOT APPLICABLE – applies to closed-end funds only
Item 10. Submission of Matters to a Vote of Security Holders.
The guidelines applicable to shareholders desiring to submit recommendations for nominees to the Registrant’s board of trustees are contained in the statement of additional information of the Trust with respect to the Fund(s) for which this Form N-CSR is being filed.
Item 11. Controls and Procedures.
(a) Based on their evaluation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “Act”)) as of a date within 90 days of the filing date of this report, the registrant’s principal executive officer and principal financial officer have concluded that such disclosure controls and procedures are reasonably designed and are operating effectively to ensure that material information relating to the registrant is made known to them by others within those entities, particularly during the period in which this report is being prepared, and that the information required in filings on Form N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of 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. Exhibits.
| (a) | (1) | Not Applicable – filed with annual report | ||
| (2) | Certifications by the registrant’s principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 and required by Rule 30a-2 under the Investment Company Act of 1940 are filed herewith. | |||
| (3) | Not Applicable | |||
| (b) | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is filed herewith. | |||
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Valued Advisers Trust
| By | ||
* /s/ R. Jeffrey Young | ||
| R. Jeffrey Young, President and Principal Executive Officer | ||
| Date | 1/31/2014 | |||
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/ R. Jeffrey Young | ||
| R. Jeffrey Young, President and Principal Executive Officer | ||
| Date | 1/31/2014 |
| By |
* /s/ Bryan W. Ashmus |
| Bryan W. Ashmus, Treasurer and Principal Financial Officer |
| Date | 1/31/2014 |
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