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: 11/30/15
Item 1. Reports to Stockholders.
SEMI-ANNUAL REPORT
November 30, 2015
BFS Equity Fund
185 Asylum Street ● City Place II ● Hartford, CT 06103 ● (855) 575-2430
Letter to Shareholders
Dear Fellow Shareholders,
Greetings in the New Year! This annual report covers the six-month period June 1, 2015 through November 30, 2015.
On June 1, 2015, the BFS Equity Fund (the “Fund”) had net assets of $20.2 million. During the course of the last six months, the net assets of the Fund increased 16% to $23.4 million as of November 30, 2015. This growth was driven by both inflows from investors into the Fund as well as by the modest positive investment returns achieved by the Fund over the last six months. As of November 30, 2015, there were approximately 515 investors in the Fund.
Numerous global economic and geo-political challenges continued to face U.S. stock markets during the period under review, which resulted in a slightly negative return for the S&P 500® Index (“S&P 500”) and Dow Jones Industrial Average® (“Dow Jones”). The Fund, however, achieved a positive total return of 0.51% for the six-month period June 1, 2015 through November 30, 2015. The Fund outperformed the negative total returns of both the S&P 500 of -0.21% and the Dow Jones of -0.37% for that same period.
This report includes a commentary from the Lead Portfolio Manager, Tim Foster, and Co-Portfolio Managers, Tom Sargent and Keith LaRose. You will also find a listing of the portfolio holdings as of November 30, 2015, as well as financial statements and detailed information about the performance and positioning of the Fund.
We view the stock market over the next year with somewhat more caution than a year ago. The slowdown in the Chinese economy and the devaluation in the yuan is one of the major concerns of investors, as the robust Chinese economy has been one of the key engines of global economic growth over the recent past. Steeply declining energy and commodity prices are seen as a possible foreshadowing of a global deflationary spiral, which brings back memories of the devastation caused by the Great Depression. Another cause for concern is that the Federal Reserve Bank has become less accommodating, and its decision to raise the Fed Funds rate in December (and hints that the Fed Funds will continue to rise modestly in 2016) also adds to investor anxiety. Finally, the manufacturing and industrial sectors of the U.S. economy are slowing, which may mean lower real GDP growth in 2016.
On the geo-political side, there are worrisome tensions in many parts of the globe. Russia’s introduction of its military into the Middle East for the first time in many decades and the recent sale of sophisticated SAM missiles to Iran are examples of belligerent foreign policies. China’s aggressive actions in the South China Sea are another cause of investor anxiety, as is the raging cauldron in the Middle East – nuclear weapons within Iran’s reach, the gains of ISIS, and the re-emergence of Al-Qaeda.
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On the positive side, we do not see a recession materializing in 2016. 2.7 million jobs were created in the U.S. in 2015, with the 4th quarter’s job growth very robust, averaging 284,000 new jobs monthly during the period. The consumer sector of the U.S. economy, which accounts for more than 70% of GDP, appears to be in good shape. In regard to a rising trajectory of interest rates in 2016, it is likely that the Federal Reserve will hold off raising interest rates in early 2016. But even with modestly higher interest rates in 2016, with a Fed Funds rate of perhaps 1%, it is hard to see this negatively affecting the U.S. economy or the stock market.
Although U.S. corporate earnings remained basically flat in 2015 due to the strength of the dollar and to reduced earnings from the energy sector, the operating earnings for the S&P 500 are projected to increase approximately 3-5% in 2016. With operating earnings for the S&P 500 forecast at $125, the current P/E ratio for the S&P 500 is 15 – below the 45-year average P/E of 16.5. While the market is not as inexpensive as it was in 2012 and early 2013, we do not believe that it is overvalued, as some might argue. Certain sectors are very expensive – social media, cybersecurity, certain biotechnology segments, among others – but there are also many quality companies the stock prices of which are, in our view, very reasonably valued.
Despite the market’s nasty January sell-off, after the period covered by this report, we remain cautiously optimistic that there is a reasonable chance that the stock market will rebound later in the year and that the bull market can continue for a seventh year.
In closing, it is important to reiterate our belief that our investment strategy of investing in quality growth stocks purchased with a risk-mitigating approach and positioned to provide a margin of safety in the case of economic or market weakness is effective over the longer term. 37 of the 44 companies which the Fund owned as of November 30 2015 pay dividends, and a considerable number are so-called “dividend aristocrats” – companies that have increased their dividend payouts annually for the past 25 years. We believe the Fund, with ownership of shares in quality companies with strong brands, good balance sheets, professional management, and robust cash flow, should be able to withstand market corrections, even bear markets, and perform well over the longer term.
The Portfolio Managers of the BFS Equity Fund and I are shareholders together with you. We thank you for the trust that you have placed in us to manage your assets.
Sincerely,
Robert H. Bradley
Chairman
Bradley, Foster & Sargent, Inc.
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Portfolio Managers’ Letter
TO OUR SHAREHOLDERS
For the six month period from June 1st 2015 to November 30th, 2015 the BFS Equity Fund returned +0.51%. Over the same period, both the S&P 500® Index (“S&P 500”) and the Dow Jones Industrial Average produced negative total returns of -0.21% and -0.37%, respectively. These negative returns for the market reflect a marked shift in investor psychology from optimism about the seven year economic recovery since 2008 to concern that the recovery cycle may indeed be over. During the period, we are pleased the Fund produced a modest positive return in the face of generally declining stock prices.
MARKET COMMENTARY
For the past seven years, the trend has been your friend in the equity markets, but over the past six months the duration and the magnitude of the stock market recovery extended into a loftier zone and seemed to run out of oxygen. While the decline in the benchmark indices was hardly measurable over the full six month period, in the interim the market experienced a sharp 12% correction. In a virtual Deja vu of the 10% correction in October of 2014, the reality of the signaled end to the zero interest rate policy of the Federal Reserve, as well as the continued inflating value of the U.S. dollar and ensuing commodity price collapse, dashed earnings prospects forcing the market to test the 2014 low.
Perceived risks ballooned through 2015 and complacency evaporated. Among the many market concerns, the slowdown in global growth was first and foremost. In the US, Real GDP growth declined from 3.9% in the second quarter to an estimated 1.5% in the fourth quarter. In China, growth slowed to about 6.0% (down from almost twice that a few years ago), prompting policy makers to devalue the Yuan versus the dollar. The dollar strengthened versus almost every global currency with the biggest impact stemming from the Yuan, the Euro and the Yen. For commodities priced in dollars, like oil, this meant a sharp drop in price and slashing of capital spending budgets. For U.S. manufacturers of everything from jet engines to tractors and bulldozers, the dollar strength means a competitive disadvantage for global pricing. For U.S. companies doing business across the globe, translating foreign profits back to stronger U.S. dollars means fewer dollars – hence lower profits. Estimates for corporate profits, which at the start of 2015 were optimistic at high single digit or low double digit comparisons, collapsed to -3.5% for the fourth quarter of 2015.
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When the market sells at a reasonable multiple relative to history and to prevailing interest rates, as the market currently does at about 16 times forward twelve month expected earnings, then further price appreciation is most likely to be driven by earnings. The flattening of earnings expectations seems fairly reflected by the flattening out in the market’s advance.
With little pricing power to be had in this near zero inflation environment, revenue growth has been nearly nonexistent. If revenue growth can’t drive profits higher, then growth will have to come from margins. But pretax margins are already at record highs of about 10% – what will drive margins higher from here? The substitution of capital for labor has historically been a primary driver of productivity, but as labor markets tighten (unemployment has declined from 10% at the start of this cycle to now 5%), the cost of labor will inevitably go up thereby putting downward pressure on margins. Witness the public and private employees that have recently benefited from higher mandated minimum wages. Lean manufacturing practices have come a long way and further improvements can always be found, but the impact of tighter labor will likely pressure margins lower.
INVESTMENT STRATEGY
The outcome of this confounding economic stew has been poor performance from the economically sensitive sectors like Basic Materials, Energy, Manufacturing and Transportation, as well as a laser like focus on the few large companies that can show genuine revenue growth. Among these names, Amazon, Alphabet (formerly Google), Facebook and Netflix stand out. For calendar 2015, the top ten stocks in the S&P 500 (including these names) returned 17% while the next 490 names declined by 5%. A market characterized by a handful of winners amidst a majority of declining names is generally not a healthy market. In 2015, a Growth-At-Any-Price (GAAP) strategy was highly rewarded. Now, valuations of these winning names are well in excess of both the current market mean valuation as well as historical means. Preservation of capital conflicts with reaching for high returns, but is an important objective of the BFS Equity Fund strategy. The lessons of the “Tech Wreck” of 2002 have not been forgotten and in the very long run, everything reverts to the mean. Riding a P/E (Price to Earnings multiple) of over 100 back to a market mean of 16 is a painful experience – one which virtually every technology stock from the turn of the millennium experienced. We view the challenge in the coming quarters as threefold: One, the quest for attractive Growth-At-A-Reasonable-Price (GARP)
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candidates; Two, seeking out those contrarian high quality names that suffered the headwinds of the strength of the dollar and the softness of commodity prices and the weak manufacturing economy; and Three, the hunt for event driven bargains. It can be anyone’s guess where consumers may spend their price-at-the-pump energy savings, or how long El Nino will last and the effect on crop prices. How long does it take to win back consumers from either a food or pharmaceutical contamination issue or manufacturing setback? The market is often impatient about negative events. We do a lot of homework on great companies that are priced out of our valuation parameters. If a negative event can provide the right price, our mission is to determine the extent of the problem and figure out when and if the stock might return to its former unblemished valuation. Among the criteria that drive buy and sell decisions throughout the markets these days, patience is a fallen angel. In our view, good companies at good prices plus a little patience is often the formula for success.
INVESTMENT COMMENTARY
As the six plus year bull market since March 2009 stalled out during the past six months, our forecast looking forward is more tentative. Stay with the winners? Or dig for new value? Growth clearly outperformed value over the period, but markets are finicky and leadership often rotates. We have given up on some ideas that did not work. We have added some new names for growth, but we are also shopping among some of last year’s least favorite stocks where we believe fundamental changes have occurred which should lead to better performance going forward.
Importantly, we believe the key underpinnings for positive equity performance are still in place. The economy is growing – we think Real GDP growth should be in the 2+% range. The Fed is still friendly – we view the symbolic December 0.25% rate rise as more of a slight backing off of the accelerator vs. a tap on the brake. Inflation is below the Fed target – CPI is still below the Fed’s 2% target. The market valuation is neutral – while some valuation metrics are clearly lofty, the current P/E multiple of 16 is virtually at the 30 year mean. Lastly, amidst much global conflict and uncertainty, investing in U.S. dollars, in U.S. companies and in the U.S. regulatory environment continues to be a relatively good bet.
Technology
The Technology sector was our heaviest weighted sector at 24.7%, higher than the S&P 500 at 20.9%. Both our overweighting, as well as our stock
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selections, helped the Technology sector provide the highest sector contribution of +8.1% vs. the S&P contribution of +3.0%. Our largest position and top performer was Alphabet (formerly Google, at +39.9%) followed by Microsoft (+17.5%) and Adobe (+15.6%). Apple (-8.3%) was, surprisingly, our weakest tech holding.
Healthcare
Our second largest sector weighting was Healthcare at 16.5% versus 14.6% for the S&P. As pre-election politics heated up, so did fears over government controlled pricing and the sector produced a negative return of -5.3% for the Fund and -4.4% for the S&P. All of the pharmaceutical producers lost ground with Novartis dropping -17.0%. Biotech fared no better with all three of our holdings – Biogen, Celgene and Gilead – all contributing single digit losses. Thermo Fisher had the best return at +7.0% followed by well diversified Johnson & Johnson at +2.6%.
Consumer Discretionary
The Consumer Discretionary sector was the best S&P sector performer at +6.7%. The Fund’s discretionary holdings fell slightly shy of that at +6.2%. We were somewhat overweight the sector at 14.5% versus 13.1% for the S&P. Nike (+30.4%), Home Depot (+21.4%) and Starbucks (+18.9%) were our top performers. Surprising news from Disney that ESPN subscriptions actually declined rocked the media industry, but Disney managed a +3.4% gain. Our biggest surprise and detractor from performance was Polaris, which declined -22.7%. Polaris battled high currency headwinds, a manufacturing glitch in their new painting facility and, finally, the warmest December on record. While we have evoked the three strikes and you’re out rule in the past, we believe these events could easily shift from headwinds to tailwinds in future quarters and we have added to our position.
Industrials
The manufacturing economy weakened through the second and third quarters of this year causing us to narrow our overweighting to 12.4% compared to the S&P 500 Industrial sector weighting of 10.1%. The sector contributed zero to returns for the S&P and a modest loss of -0.4% for the Fund. We were pleased to see the market come to appreciate the massive restructuring at GE with the stock gaining +11.7%. Danaher as well announced a major acquisition of Pall Corp and a two way split along industrial and life sciences lines. The market liked
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the idea and the stock gained +12.0%. The strong dollar hurt United Technologies (-17.0%) and the collapse of commodity prices drove Union Pacific down -15.7%.
Consumer Staples
Always liking the defensive characteristics of the Consumer Staples sector, we overweighted the sector 11.1% versus the S&P at 9.5%. Positive attribution from stock selection helped push the Fund’s sector return to +5.8% versus the S&P at +2.6%. Constellation Brands led the sector at +19.6%. Our favorite retailer, Costco, contributed +13.8%. CVS (-7.5%) and Nestle (-1.8%) both lost a little ground.
Financials
Although bank balance sheets continued to improve and bank loan growth accelerated to about 8%, the S&P 500 Financial sector showed a modest return of +0.7%. The Fund’s Financial sector return was slightly better at +1.8%. Our weighting was well below the S&P weighting at 10.9% versus 16.6% for the S&P. The world of ZIRP (Zero Interest Rate Policy) has been a major headwind for the banking industry. M&T Bank finally gained approval for the acquisition of Hudson City Bancorp and gained +4.9%. American Express, approaching the end of their Costco partnership, lost -2.4%.
Energy
A couple of years ago, we would never have forecast the implosion of energy prices we have seen, but the strong dollar, the game changing productivity of shale drilling in the U.S. and OPEC pumping flat out, all conspired to drive oil and gas prices to multi-year lows. Anticipating the cyclical nature of commodity oriented businesses, we slightly overweighted the sector at 8.6% versus the S&P at 7.1%, believing most of the damage had been done. It appears we are still too early as Energy was the worst performing S&P sector (-11.3%). The Fund fared better, declining a more modest -6.5%. With the industry bleeding globally, we stuck with the biggest and the best: Exxon (-0.6%), Schlumberger (-13.4%) and EOG (-5.6%).
Materials, Telecommunications and Utilities
Combined, these sectors represent about 8.1% of the S&P 500. We had no exposure in the Fund to these sectors at the end of the period. Similar to our view of the cyclical nature of energy stocks, we thought there might (and may still) be an opportunity in gold. We stuck our toe in the water with a small position in Agnico Eagle Mines (-27.4%). It didn’t feel very good, so we got out!
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CLOSING COMMENTS
The Fed has taken its first step in a return to more normal interest rate policy by raising the Fed Funds rate by a symbolic 25 basis points. We view this positively as the Fed recognizes growing underlying strength in the economy and labor markets. The U. S. dollar’s strength provides great purchasing power and a relative safe haven global currency. Low energy and commodity prices lowers the price of cost of goods sold, as well as living expenses for consumers. Technological advances in data processing, life sciences, communications and manufacturing techniques provide important venues for growth. These are the opportunities. Terror, politics, regulations, loss in confidence – the risks are many. There are compelling cases to be both bullish and bearish. Within the BFS Equity Fund, we have attempted to achieve a balance between growth and defensive positioning. We, at Bradley, Foster & Sargent, Inc., look forward to serving you through our management of the BFS Equity Fund. Thank you for placing your capital, along with ours, under our care.
Timothy Foster | Keith LaRose | Thomas Sargent | ||
Lead Portfolio Manager | Co-Portfolio Manager | Co-Portfolio Manager |
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SEMI-ANNUAL PERFORMANCE REVIEW
(UNAUDITED)
The Fund outperformed the S&P 500 and the Dow Jones Industrial Average for the six-month period June 1, 2015 through November 30, 2015, returning +0.51% versus -0.21% for the S&P 500 and -0.37% for the Dow Jones Industrial Average.
Key Detractors from Relative Results
• | Basic Materials was the Fund’s weakest sector – by far. Our single holding of Agnico Eagle Mines declined by -27.4%. Fortunately, it was a small position and has since been eliminated. Similarly, we had no exposure to the Telecommunications sector which produced negative returns for the S&P. |
• | The normally reliable Healthcare sector was disappointing. We were slightly overweight by 2 percentage points and had slightly worse returns versus the S&P 500 at -5.3% versus -4.4%. Both our traditional pharmaceuticals, as well as biotech holdings, produced negative returns. |
Key Contributors to Relative Results
• | The Technology sector provided the largest contribution to returns relative to the S&P 500. Both our overweighting of the sector, as well as our stock selection, contributed to the outperformance. Our largest position and top performer was Alphabet (formerly Google, at +39.9%) followed by Microsoft (+17.5%) and Adobe (+15.6%). |
• | While we were only modestly overweight the Consumer Staples sector, our stock selection significantly outperformed the S&P 500. Constellation Brands led the sector at +19.6%. Our favorite retailer, Costco, contributed +13.8%. |
• | In the Energy sector, which had negative returns for both the Fund and the S&P 500, our stock selection helped mitigate the damage with a negative contribution of -6.5% versus the S&P 500 at -11.3%. The biggest and the best, Exxon, drove the relative contribution. |
FUND INFORMATION
ASSET ALLOCATION
(as a percentage of total investments)
TEN LARGEST HOLDINGS (%) | FUND | |||
Alphabet Inc. Class A | 3.6 | |||
Danaher | 3.1 | |||
Apple Inc. | 3.1 | |||
Microsoft | 2.8 | |||
General Electric | 2.6 | |||
Nike Inc. Class B | 2.6 | |||
Mastercard Inc. Class A | 2.5 | |||
Polaris Industries Inc. | 2.5 | |||
United Technologies | 2.5 | |||
Walt Disney | 2.4 |
SECTOR DIVERSIFICATION (%) | FUND | S&P 500 | ||||||
Technology | 24.7 | 20.9 | ||||||
Healthcare | 16.5 | 14.6 | ||||||
Consumer Discretionary | 14.5 | 13.1 | ||||||
Industrial | 12.4 | 10.1 | ||||||
Consumer Staples | 11.1 | 9.5 | ||||||
Financials | 10.9 | 16.6 | ||||||
Energy | 8.6 | 7.1 | ||||||
Cash Equivalents | 1.3 | 0.0 | ||||||
Materials | 0.0 | 2.9 | ||||||
Telecommunication Services | 0.0 | 2.3 | ||||||
Utilities | 0.0 | 2.9 |
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Investment Results (Unaudited)
Total Returns(a)
(For the periods ended November 30, 2015)
Annualized | ||||||||||||
6 Months | One Year | Since Inception (November 8, 2013) | ||||||||||
BFS Equity Fund | 0.51% | 4.75% | 8.32% | |||||||||
S&P 500® Index(b) | -0.21% | 2.75% | 11.11% | |||||||||
Dow Jones Industrial Average®(c) | -0.37% | 1.86% | 9.00% |
Total annual operating expenses, as disclosed in the Fund’s prospectus dated September 28, 2015, were 2.26% of average daily net assets (1.25% after fee waivers/expense reimbursements by Bradley, Foster & Sargent, Inc. (the “Adviser”)). The Adviser has contractually agreed to waive or limit its fees and assume other expenses of the Fund until September 30, 2016, so that total annual fund operating expenses do 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, in any 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. Each waiver or reimbursement of an expense by the Adviser is subject to repayment by the Fund within the three fiscal years following the fiscal year in which the expense was incurred, provided that the Fund is able to make the repayment without exceeding the expense limitation in place at the time of the waiver or reimbursement. This agreement may only be terminated by mutual consent of the Adviser and the Board of Trustees.
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 (855) 575-2430.
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(a) Return figures reflect any change in price per share and assume the reinvestment of all distributions. The Fund’s returns reflect any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would have been lower.
(b) 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.
(c) The Dow Jones Industrial Average® is a widely recognized unmanaged index of equity prices and is representative of a narrower 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, strategies, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the Fund and may be obtained by calling the same number as above. Please read it carefully before investing.
The Fund is distributed by Unified Financial Securities, LLC, member FINRA.
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 will be available at the SEC’s website at www.sec.gov. The Fund’s 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 (800) SEC-0330.
SUMMARY OF 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, 2015 to November 30, 2015.
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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 “Expenses Paid During the Period Ended November 30, 2015” 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 redemption 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.
Beginning Account Value | Ending Account Value | Expenses the Period Ended | ||||||||||
BFS Equity Fund | June 1, 2015 | November 30, 2015 | November 30, 2015(a) | |||||||||
Actual | $ | 1,000.00 | $ | 1,005.10 | $ | 6.27 | ||||||
Hypothetical(b) (5% return before expenses) | $ | 1,000.00 | $ | 1,018.74 | $ | 6.31 |
(a) | Expenses are equal to the Fund’s annualized expense ratio of 1.25%, multiplied by the average account value over the period, multiplied by 183/366. |
(b) | Assumes a 5% return before expenses. |
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Schedule of Investments (Unaudited)
November 30, 2015
Shares | Fair Value | |||||||
COMMON STOCKS — 98.44% | ||||||||
Aerospace & Defense 2.47% | ||||||||
6,000 | United Technologies Corp. | $ | 576,300 | |||||
|
| |||||||
Beverages 3.39% | ||||||||
3,500 | Constellation Brands, Inc. - Class A | 490,910 | ||||||
3,000 | PepsiCo, Inc. | 300,480 | ||||||
|
| |||||||
791,390 | ||||||||
|
| |||||||
Biotechnology 5.07% | ||||||||
1,500 | Biogen, Inc.* | 430,290 | ||||||
3,500 | Celgene Corp.* | 383,075 | ||||||
3,500 | Gilead Sciences, Inc. | 370,860 | ||||||
|
| |||||||
1,184,225 | ||||||||
|
| |||||||
Commercial Banks 8.75% | ||||||||
12,000 | East West Bancorp, Inc. | 520,560 | ||||||
4,000 | M&T Bank Corp. | 501,320 | ||||||
12,000 | U.S. Bancorp | 526,680 | ||||||
9,000 | Wells Fargo & Co. | 495,900 | ||||||
|
| |||||||
2,044,460 | ||||||||
|
| |||||||
Computers & Peripherals 3.04% | ||||||||
6,000 | Apple, Inc. | 709,800 | ||||||
|
| |||||||
Diversified Financial Services 2.14% | ||||||||
7,500 | JPMorgan Chase & Co. | 500,100 | ||||||
|
| |||||||
Electronic Equipment, Instruments & Components 4.42% | ||||||||
9,000 | Amphenol Corp. - Class A | 495,450 | ||||||
8,000 | TE Connectivity Ltd. | 536,720 | ||||||
|
| |||||||
1,032,170 | ||||||||
|
| |||||||
Energy Equipment & Services 4.33% | ||||||||
4,000 | Core Laboratories N.V. | 472,600 | ||||||
7,000 | Schlumberger Ltd. | 540,050 | ||||||
|
| |||||||
1,012,650 | ||||||||
|
| |||||||
Food & Staples Retailing 3.80% | ||||||||
2,000 | Costco Wholesale Corp. | 322,840 | ||||||
6,000 | CVS Health Corp. | 564,540 | ||||||
|
| |||||||
887,380 | ||||||||
|
| |||||||
Food Products 2.05% | ||||||||
11,000 | Mondelez International, Inc. - Class A | 480,260 | ||||||
|
| |||||||
Hotels, Restaurants & Leisure 2.31% | ||||||||
8,800 | Starbucks Corp. | 540,232 | ||||||
|
| |||||||
Household Durables 2.40% | ||||||||
12,000 | Jarden Corp.* | 560,160 | ||||||
|
|
See accompanying notes which are an integral part of these financial statements.
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Schedule of Investments (Unaudited) (continued)
November 30, 2015
Shares | Fair Value | |||||||
COMMON STOCKS — (continued) | ||||||||
Household Products 1.83% | ||||||||
5,000 | Church & Dwight Co., Inc. | $ | 428,850 | |||||
|
| |||||||
Industrial Conglomerates 5.65% | ||||||||
7,500 | Danaher Corp. | 722,925 | ||||||
20,000 | General Electric Co. | 598,800 | ||||||
|
| |||||||
1,321,725 | ||||||||
|
| |||||||
Internet Software & Services 3.59% | ||||||||
1,100 | Alphabet, Inc. - Class A* | 839,135 | ||||||
|
| |||||||
IT Services 6.60% | ||||||||
8,000 | Cognizant Technology Solutions Corp. - Class A* | 516,640 | ||||||
6,000 | MasterCard, Inc. - Class A | 587,520 | ||||||
15,000 | Sabre Corp. | 438,900 | ||||||
|
| |||||||
1,543,060 | ||||||||
|
| |||||||
Leisure Equipment & Products 2.48% | ||||||||
5,500 | Polaris Industries, Inc. | 579,865 | ||||||
|
| |||||||
Life Sciences Tools & Services 2.37% | ||||||||
4,000 | Thermo Fisher Scientific, Inc. | 553,600 | ||||||
|
| |||||||
Media 2.43% | ||||||||
5,000 | Walt Disney Co./The | 567,350 | ||||||
|
| |||||||
Oil, Gas & Consumable Fuels 4.24% | ||||||||
6,000 | EOG Resources, Inc. | 500,580 | ||||||
6,000 | Exxon Mobil Corp. | 489,960 | ||||||
|
| |||||||
990,540 | ||||||||
|
| |||||||
Pharmaceuticals 9.02% | ||||||||
5,000 | Johnson & Johnson | 506,200 | ||||||
10,000 | Merck & Co., Inc. | 530,100 | ||||||
6,000 | Novartis AG ADR | 511,440 | ||||||
12,000 | Zoetis, Inc. | 560,400 | ||||||
|
| |||||||
2,108,140 | ||||||||
|
| |||||||
Professional Services 2.20% | ||||||||
11,000 | Nielsen Holdings PLC | 513,480 | ||||||
|
| |||||||
Software 6.94% | ||||||||
5,500 | Adobe Systems, Inc.* | 503,030 | ||||||
5,000 | ANSYS, Inc.* | 466,050 | ||||||
12,000 | Microsoft Corp. | 652,200 | ||||||
|
| |||||||
1,621,280 | ||||||||
|
| |||||||
Specialty Retail 2.29% | ||||||||
4,000 | Home Depot, Inc./The | 535,520 | ||||||
|
|
See accompanying notes which are an integral part of these financial statements.
14
Schedule of Investments (Unaudited) (continued)
November 30, 2015
Shares | Fair Value | |||||||
COMMON STOCKS — (continued) | ||||||||
Textiles, Apparel & Luxury Goods 2.55% | ||||||||
4,500 | NIKE, Inc. | $ | 595,260 | |||||
|
| |||||||
Trading Companies & Distributors 2.08% | ||||||||
12,000 | Fastenal Co. | 486,960 | ||||||
|
| |||||||
Total Common Stocks (Cost $20,175,268) | 23,003,892 | |||||||
|
| |||||||
Money Market Funds 1.38% | ||||||||
321,443 | Fidelity Prime Money Market Portfolio, Institutional Class, 0.17%(a) | 321,443 | ||||||
|
| |||||||
Total Money Market Funds (Cost $321,443) | 321,443 | |||||||
|
| |||||||
Total Investments 99.82% (Cost $20,496,711) | 23,325,335 | |||||||
|
| |||||||
Other Assets in Excess of Liabilities 0.18% | 42,998 | |||||||
|
| |||||||
TOTAL NET ASSETS 100.00% | $ | 23,368,333 | ||||||
|
|
(a) | Rate disclosed is the seven day yield as of November 30, 2015. |
* | Non-income producing security. |
ADR | — American Depositary Receipt |
The sectors shown on the schedule of investments are based on Global Industry Classification Standard, or GICS® (“GICS”). The GICS was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC (“S&P”). GICS is a service mark of MSCI, Inc. and S&P and has been licensed for use by Huntington Asset Services, Inc.
See accompanying notes which are an integral part of these financial statements.
15
Statement of Assets and Liabilities (Unaudited)
November 30, 2015
Assets | ||||
Investments in securities at fair value (cost $20,496,711) | $ | 23,325,335 | ||
Receivable for fund shares sold | 66,845 | |||
Receivable for investments sold | 420,554 | |||
Dividends receivable | 36,274 | |||
Prepaid expenses | 14,964 | |||
Total Assets | 23,863,972 | |||
Liabilities | ||||
Payable for fund shares redeemed | 10,058 | |||
Payable for investments purchased | 439,461 | |||
Payable to Adviser | 2,923 | |||
Payable to administrator, fund accountant, and transfer agent | 16,666 | |||
Payable to custodian | 350 | |||
Payable to trustees | 181 | |||
Distribution fees accrued | 4,762 | |||
Other accrued expenses | 21,238 | |||
Total Liabilities | 495,639 | |||
Net Assets | $ | 23,368,333 | ||
Net Assets consist of: | ||||
Paid-in capital | $ | 21,038,260 | ||
Accumulated undistributed net investment income | 60,634 | |||
Accumulated undistributed net realized loss from investment transactions | (559,185 | ) | ||
Net unrealized appreciation on investments | 2,828,624 | |||
Net Assets | $ | 23,368,333 | ||
Shares outstanding (unlimited number of shares authorized, no par value) | 1,988,386 | |||
Net asset value, offering and redemption price per share | $ | 11.75 |
16
See accompanying notes which are an integral part of these financial statements.
Statement of Operations (Unaudited)
For the six months ended November 30, 2015
Investment Income | ||||
Dividend income (net of foreign taxes withheld of $3,207) | $ | 165,792 | ||
Total investment income | 165,792 | |||
Expenses | ||||
Investment Adviser | 80,874 | |||
Distribution (12b-1) | 26,958 | |||
Administration | 19,001 | |||
Fund accounting | 12,500 | |||
Transfer agent | 18,900 | |||
Legal | 7,709 | |||
Registration | 12,126 | |||
Custodian | 2,100 | |||
Audit | 7,750 | |||
Trustee | 2,399 | |||
Report printing | 8,231 | |||
Miscellaneous | 6,078 | |||
Total expenses | 204,626 | |||
Fees waived and reimbursed by Adviser | (69,972 | ) | ||
Net operating expenses | 134,654 | |||
Net investment income | 31,138 | |||
Net Realized and Unrealized Gain/(Loss) on Investments | ||||
Net realized loss on investment securities transactions | (203,222 | ) | ||
Net change in unrealized appreciation of investment securities | 374,431 | |||
Net realized and unrealized gain on investments | 171,209 | |||
Net increase in net assets resulting from operations | $ | 202,347 |
17
See accompanying notes which are an integral part of these financial statements.
Statements of Changes in Net Assets
Increase in Net Assets due to: | For the Six Months Ended November 30, 2015 (Unaudited) | For the Year Ended May 31, 2015 | ||||||
Operations | ||||||||
Net investment income | $ | 31,138 | $ | 49,326 | ||||
Net realized loss on investment securities transactions | (203,222 | ) | (179,137 | ) | ||||
Net change in unrealized appreciation of investment securities | 374,431 | 1,676,273 | ||||||
Net increase in net assets resulting from operations | 202,347 | 1,546,462 | ||||||
Distributions | ||||||||
From net investment income | – | (50,367 | ) | |||||
Total distributions | – | (50,367 | ) | |||||
Capital Transactions | ||||||||
Proceeds from shares sold | 3,203,900 | 6,774,960 | ||||||
Reinvestment of distributions | – | 31,188 | ||||||
Amount paid for shares redeemed | (205,405 | ) | (879,815 | ) | ||||
Net increase in net assets resulting from capital transactions | 2,998,495 | 5,926,333 | ||||||
Total Increase in Net Assets | 3,200,842 | 7,422,428 | ||||||
Net Assets | ||||||||
Beginning of period | 20,167,491 | 12,745,063 | ||||||
End of period | $ | 23,368,333 | $ | 20,167,491 | ||||
Accumulated undistributed net investment income included in net assets at end of period | $ | 60,634 | $ | 29,496 | ||||
Share Transactions | ||||||||
Shares sold | 280,892 | 613,346 | ||||||
Issued in reinvestment of distributions | – | 2,772 | ||||||
Redeemed | (17,603 | ) | (79,058 | ) | ||||
Net increase in shares outstanding | 263,289 | 537,060 |
18
See accompanying notes which are an integral part of these financial statements.
Financial Highlights
(For a share outstanding during each period)
For the Six Months Ended November 30, 2015 (Unaudited) | For the Year Ended May 31, 2015 | For the Period Ended May 31, 2014(a) | ||||||||||
Selected Per Share Data: | ||||||||||||
Net asset value, beginning of period | $11.69 | $10.73 | $10.00 | |||||||||
|
|
|
|
|
| |||||||
Income from investment operations: | ||||||||||||
Net investment income | 0.01 | 0.02 | 0.04 | |||||||||
Net realized and unrealized gain on investments | 0.05 | 0.97 | 0.70 | |||||||||
|
|
|
|
|
| |||||||
Total from investment operations | 0.06 | 0.99 | 0.74 | |||||||||
|
|
|
|
|
| |||||||
Less distributions to shareholders from: | ||||||||||||
Net investment income | — | (0.03 | ) | (0.01 | ) | |||||||
|
|
|
|
|
| |||||||
Total distributions | — | (0.03 | ) | (0.01 | ) | |||||||
|
|
|
|
|
| |||||||
Net asset value, end of period | $11.75 | $11.69 | $10.73 | |||||||||
|
|
|
|
|
| |||||||
Total Return(b) | 0.51 | %(c) | 9.27 | % | 7.36 | %(c) | ||||||
Ratios and Supplemental Data: | ||||||||||||
Net assets, end of period (000) | $23,368 | $20,167 | $12,745 | |||||||||
Ratio of expenses to average net assets | 1.25 | %(d) | 1.25 | % | 1.25 | %(d) | ||||||
Ratio of expenses to average net assets before waiver and reimbursement | 1.90 | %(d) | 2.26 | % | 3.93 | %(d) | ||||||
Ratio of net investment income to average net assets | 0.29 | %(d) | 0.30 | % | 0.68 | %(d) | ||||||
Ratio of net investment loss to average net assets before waiver and reimbursement | (0.36 | )%(d) | (0.71 | )% | (2.00 | )%(d) | ||||||
Portfolio turnover rate | 10.58 | %(c) | 51.17 | % | 46.50 | %(c) |
(a) | For the period November 8, 2013 (commencement of operations) to May 31, 2014. |
(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 distributions, if any. |
(c) | Not annualized |
(d) | Annualized |
19
See accompanying notes which are an integral part of these financial statements.
Notes to the Financial Statements (Unaudited)
November 30, 2015
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 Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services-Investment Companies”. 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 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 six months ended November 30, 2015, 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 last six months, 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.
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 specific identification as its tax lot identification method for all securities transactions. 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
20
Notes to the Financial Statements (Unaudited) (continued)
November 30, 2015
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 and short term capital gains, if any, at least annually. 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.
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. GAAP establishes 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 – unadjusted quoted prices in active markets for identical investments and/or registered investment companies where the value per share is determined and published and is the basis for current transactions for identical assets or liabilities at the valuation date. |
• | 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) |
21
Notes to the Financial Statements (Unaudited) (continued)
November 30, 2015
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 Adviser 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 Adviser 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, in conformity with guidelines adopted by and subject to review by the Board. These securities will generally 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, with support from the Adviser, 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 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 management’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.
22
Notes to the Financial Statements (Unaudited) (continued)
November 30, 2015
The following is a summary of the inputs used to value the Fund’s investments as of November 30, 2015:
Valuation Inputs | ||||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 23,003,892 | $— | $ | — | $ | 23,003,892 | |||||||||
Money Market Funds | 321,443 | — | — | 321,443 | ||||||||||||
Total | $ | 23,325,335 | $— | $ | — | $ | 23,325,335 |
* | Refer to Schedule of Investments for industry classifications. |
The Fund did not hold any investments at any time during the reporting period in which other significant observable inputs (Level 2) were used in determining fair value. 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. The Fund 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 during the six months ended November 30, 2015 and the previous reporting period end.
NOTE 4 – FEES AND OTHER TRANSACTIONS WITH AFFILIATES AND OTHER SERVICE PROVIDERS
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 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 six months ended November 30, 2015, the Adviser earned a fee of $80,874 from the Fund before the waivers described below. At November 30, 2015, the Fund owed the Adviser $2,923.
The Adviser has contractually agreed to waive or limit its fee and assume other expenses of the Fund, until September 30, 2016, so that the ratio of total annual operating expenses do not exceed 1.00%. This operating expense limitation does not apply to interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, 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 “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 recoup the sum of all fees previously waived or expenses reimbursed during any of the previous three years, less any reimbursement previously paid, provided total expenses do not exceed the limitation set forth above. For the six months ended November 30, 2015,
23
Notes to the Financial Statements (Unaudited) (continued)
November 30, 2015
expenses totaling $69,972 were waived or reimbursed by the Adviser. The amounts subject to repayment by the Fund, pursuant to the aforementioned conditions are as follows:
Amount | Recoverable through May 31, | |||
$146,030 | 2017 | |||
$163,520 | 2018 | |||
$69,972 | 2019 |
The Trust retains Ultimus Asset Services, LLC (formerly Huntington Asset Services, Inc. – see Subsequent Events) (“Ultimus”) 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 six months ended November 30, 2015, Ultimus earned fees of $19,001 for administrative and compliance services provided to the Fund. At November 30, 2015, Ultimus was owed $6,334 from the Fund for administrative and compliance services. Certain officers of the Trust are members of management and/or employees of Ultimus. Ultimus is a wholly-owned subsidiary of Ultimus Fund Solutions, LLC, the parent company of Unified Financial Securities, LLC (the “Distributor”). Huntington National Bank, the custodian of the Fund’s investments (the “Custodian”) was previously affiliated with Huntington Asset Services, Inc. For the six months ended November 30, 2015, the Custodian earned fees of $2,100 for custody services provided to the Fund. At November 30, 2015, the Custodian was owed $350 from the Fund for custody services.
The Trust also retains Ultimus to act as the Fund’s transfer agent and to provide fund accounting services. For the six months ended November 30, 2015, Ultimus earned fees of $18,900 for transfer agent services and reimbursement for out-of-pocket expenses incurred in providing transfer agent services to the Fund. At November 30, 2015, the Fund owed Ultimus $6,165 for transfer agent services and out-of-pocket expenses. For the six months ended November 30, 2015, Ultimus earned fees of $12,500 from the Fund for fund accounting services. At November 30, 2015, Ultimus was owed $4,167 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. For the six months ended November 30, 2015, 12b-1 expense incurred by the Fund was $26,958. The Fund owed $4,762 for 12b-1 fees as of November 30, 2015.
Unified Financial Securities, LLC acts as the principal distributor of the Fund’s shares. A trustee and an officer of the Trust is an officer of the Distributor and such person may be deemed to be an affiliate of the Distributor.
24
Notes to the Financial Statements (Unaudited) (continued)
November 30, 2015
NOTE 5 – PURCHASES AND SALES OF SECURITIES
For the six months ended November 30, 2015, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations, were as follows:
Purchases | Sales | |||||
$ | 5,423,822 | $ | 2,221,467 |
There were no purchases or sales of long-term U.S. government obligations during the six months ended November 30, 2015.
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.
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, 2015, Charles Schwab & Co. (“Schwab”) owned, as record shareholder, 58% of the outstanding shares of the Fund. It is not known whether Schwab or any of the underlying beneficial owners owned or controlled 25% or more of the voting securities of the Fund.
NOTE 8 – FEDERAL TAX INFORMATION
At November 30, 2015, the net unrealized appreciation (depreciation) of investments for tax purposes was as follows:
Gross Unrealized Appreciation | $ | 3,136,672 | ||
Gross Unrealized (Depreciation) | (352,805 | ) | ||
Net Unrealized Appreciation on Investments | $ | 2,783,867 |
At November 30, 2015, the aggregate cost of securities for federal income tax purposes was $20,541,468 for the Fund.
At May 31, 2015, the Fund’s most recent fiscal year end, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Undistributed ordinary income | $ | 29,496 | ||
Undistributed long-term capital gains | — | |||
Accumulated capital and other losses | (311,206 | ) | ||
Unrealized Appreciation | 2,409,436 | |||
Total | $ | 2,127,726 |
The difference between book and tax basis appreciation was attributable primarily to the tax deferral of losses on wash sales in the amount of $44,757.
25
Notes to the Financial Statements (Unaudited) (continued)
November 30, 2015
The tax character of distributions paid for the fiscal year ended May 31, 2015 was as follows:
2015 | ||||
Distributions paid from: | ||||
Ordinary Income | $ | 50,367 |
As of May 31, 2015, the Fund has available for federal tax purposes an unused capital loss carryforward of $177,167 of short-term capital losses with no expiration, which is available to offset against future taxable net capital gains. To the extent that these carryforwards are used to offset future gains, it is probable that the amount offset will not be distributed to shareholders.
Certain capital losses incurred after October 31, and within the current taxable year, are deemed to arise on the first business day of the Fund’s following taxable year. For the tax year ended May 31, 2015, the Fund deferred post October capital losses in the amount of $134,039.
NOTE 9 – COMMITMENTS AND CONTINGENCIES
The Fund indemnifies its officers and trustees for certain liabilities that may arise from performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of 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 EVENTS
Management of the Fund has evaluated the need for disclosure and/or adjustments resulting from subsequent events through the date these financials were issued. On November 13, 2015, Huntington Bancshares, Inc. entered into an agreement to sell Huntington Asset Services, Inc. and Unified Financial Services, Inc. to Ultimus Fund Solutions, LLC. The sale closed on December 31, 2015. Management has determined that there were no additional items requiring additional disclosure.
26
Investment Advisory agreement Approval (Unaudited)
At a meeting held on June 2-3, 2015, the Board of Trustees (the “Board”) considered the renewal of the Investment Advisory Agreement (the “Agreement”) between the Trust and Bradley, Foster & Sargent, Inc. (the “Adviser” or “BFS”) 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 discussed the arrangements between the Adviser and the Trust with respect to the Fund.
Counsel directed the Trustees to a memorandum that summarized, among other things, the fiduciary duties and responsibilities of the Board in reviewing and approving the renewal of the Agreement. The Board then discussed the specific contractual arrangements between the Trust and BFS with respect to the Fund. They reflected upon the Board’s prior experience with BFS in managing the Fund, as well as their earlier discussion with representatives of BFS.
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 renewal of the Agreement, including the following material factors: (i) the nature, extent, and quality of the services to be provided by BFS; (ii) the investment performance of the Fund;(iii) the costs of the services to be provided and anticipated profits to be realized by BFS 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) BFS’s practices regarding possible conflicts of interest and potential benefits derived from its relationship with the Fund.
In assessing the factors and reaching its decision, the Board took into consideration information furnished for the Board’s review and consideration throughout the year at regular Board meetings, as well as information specifically requested and prepared and/or presented in connection with the annual renewal process, including information presented at the Meeting. The Board requested, was provided with, and reflected on, information and reports relevant to the annual renewal of the Agreement, including: (i) reports regarding the services and support provided to the Fund and its shareholders by BFS; (ii) quarterly assessments of the investment performance of the Fund by personnel of BFS; (iii) commentary on the reasons for the performance; (iv) presentations by BFS addressing investment philosophy, investment strategy, personnel and operations of BFS; (v) compliance and audit reports concerning the Fund and BFS; (vi) disclosure information contained in the registration statement of the Trust with respect to the Fund and the Form ADV of BFS; and (vii) 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 with respect to 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 BFS, including financial information, a description of personnel and the managerial services 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 those historically utilized by the Fund, as well as for separate accounts managed by BFS; and (iii) benefits to be realized by BFS 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.
27
1. The nature, extent, and quality of the services to be provided by the Adviser. In this regard, the Board considered BFS’s responsibilities under the Agreement. The Trustees considered the services being provided by BFS to the Fund including, without limitation: the quality of its investment advisory services (including research and recommendations with respect to portfolio securities), its process for formulating investment recommendations and assuring compliance with the Fund’s investment objectives and limitations, its coordination of services for the Fund among the Fund’s service providers, and its efforts to promote the Fund and grow its assets. The Trustees considered BFS’s continuity of, and commitment to retain, qualified personnel and BFS’s commitment to maintain and enhance its resources and systems, the commitment of BFS’s personnel to finding alternatives and options that allow the Fund to maintain its goals, and BFS’s continued cooperation with the Independent Trustees and Counsel for the Fund. The Trustees considered BFS’s personnel, including the education and experience of BFS’s personnel. They discussed the recent addition of an individual to serve as Chief Administrative Officer and Chief Compliance Officer of BFS. After considering the foregoing information and further information in the Meeting materials provided by BFS (including BFS’s Form ADV), the Board concluded that, in light of all the facts and circumstances, the nature, extent, and quality of the services provided by BFS were satisfactory and adequate for the Fund.
2. Investment performance of the Fund and the Adviser. In considering the investment performance of the Fund and BFS, the Trustees compared the performance of the Fund with the performance of funds with similar objectives managed by other investment advisers, with aggregated peer group data, as well as with the performance of the Fund’s benchmark. The Trustees also considered the consistency of BFS’s management of the Fund with its investment objectives, strategies, and limitations. The Trustees noted that the Fund’s performance was below its benchmark for the period since inception of the Fund, but was above the benchmark for more recent periods, including the first quarter of 2015 and the year-to-date period through April. They also noted that the Fund’s performance was below that of its peer group for the one year period ended March 31, but was above its peer group for the period since inception. The Board reviewed the performance of BFS in managing separate accounts with investment strategies similar to that of the Fund and observed that the performance was relatively comparable. After reviewing and discussing the investment performance of the Fund further, BFS’s experience managing the Fund, the Fund’s historical performance, and other relevant factors, the Board concluded, in light of all the facts and circumstances, that the investment performance of the Fund and BFS was satisfactory.
3. The costs of services to be provided and the profits to be realized by the Adviser from the relationship with the Fund. In considering the costs of services to be provided and the profits to be realized by BFS from the relationship with the Fund, the Trustees considered: (1) BFS’s financial condition; (2) the asset level of the Fund; (3) the overall expenses of the Fund; and (4) the nature and frequency of advisory fee payments. The Trustees reviewed information provided by BFS regarding its profits associated with managing the Fund, noting that BFS is currently waiving its management fee and reimbursing a portion of the Fund’s expenses. The Trustees also considered potential benefits for BFS in managing the Fund. The Trustees then compared the fees and expenses of the Fund (including the management fee) to other comparable mutual funds. The Trustees noted that the Fund’s management fee is below the average and median fees of peers in its category. The Trustees also noted that the Fund’s net expense ratio was lower than that of the peer average and median, as a result of BFS’s contractual commitment to limit the expenses of the Fund. Based on the foregoing, the Board concluded that the fees to be paid to BFS by the Fund and the profits to be realized by BFS, in light of all the facts and circumstances, were fair and reasonable in relation to the nature and quality of the services provided by BFS.
28
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 BFS. The Board considered that while the management fee remained the same at all asset levels, the Fund’s shareholders experienced benefits from the Fund’s expense limitation arrangement. The Trustees noted that once the Fund’s expenses fell below the cap set by the arrangement, the Fund’s shareholders would continue to benefit from the economies of scale under the Trust’s agreement with service providers other than BFS. In light of its ongoing consideration of the Fund’s asset levels, expectations for growth in the Fund, and fee levels, the Board determined that the Fund’s fee arrangements, in light of all the facts and circumstances, were fair and reasonable in relation to the nature and quality of the services provided by BFS.
5. Possible conflicts of interest and benefits to the Adviser. In considering BFS’s practices regarding conflicts of interest, the Trustees evaluated the potential for conflicts of interest and 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 BFS’s other accounts; and the substance and administration of BFS’s code of ethics. The Trustees also considered disclosure in the registration statement of the Trust relating to BFS’s potential conflicts of interest. The Trustees noted that BFS may utilize soft dollars and the Trustees noted BFS’s policies and processes for managing the conflicts of interest that could arise from soft dollar arrangements. The Trustees noted other potential benefits to BFS, including the fact that the Fund provides an attractive vehicle for smaller accounts, which may increase the total assets under management by BFS. Based on the foregoing, the Board determined that the standards and practices of BFS relating to the identification and mitigation of potential conflicts of interest and the benefits to be realized by BFS in managing the BFS were satisfactory.
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 continuation of the Agreement between the Trust and the Adviser.
29
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.
30
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 (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
Bryan W. Ashmus, Principal Financial Officer and Treasurer
John C. Swhear, Chief Compliance Officer, AML Officer and Vice-President
Carol J. Highsmith, Vice President and Secretary
Matthew J. Miller, Vice President
INVESTMENT ADVISER
Bradley, Foster & Sargent, Inc.
185 Asylum Street, City Place II
Hartford, Connecticut 06103
DISTRIBUTOR
Unified Financial Securities, LLC
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
Ultimus Asset Services, LLC
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, LLC
Member FINRA/SIPC
SEMI-ANNUAL REPORT
November 30, 2015
CLOUD CAPITAL FUNDS
Cloud Capital Strategic All Cap Fund
Fund Adviser:
Cloud Capital LLC
P.O. Box 451179
Grove, OK 74345
Toll Free (877) 670-2227
Investment Results – (Unaudited) |
Total Returns (a) (For the periods ended November 30, 2015) | ||||||||||||||||
Average Annual Returns | ||||||||||||||||
Six Months | One Year | Three Year | Since Inception (June 29, 2011) | |||||||||||||
Cloud Capital Strategic All Cap Fund - Institutional Class | (3.57 | )% | (1.09 | )% | 13.52 | % | 10.28 | % | ||||||||
S&P 500® Index (b) | (0.21 | )% | 2.75 | % | 16.09 | % | 13.69 | % | ||||||||
Russell 3000 Index (b) (c) | (1.05 | )% | 2.58 | % | 16.00 | % | 13.27 | % | ||||||||
Russell 1000 Equal Weight Index (b) | (5.33 | )% | (1.15 | )% | 14.94 | % | 11.53 | % | ||||||||
Russell 2000 Equal Weight Index (b) | (5.45 | )% | (1.15 | )% | 12.25 | % | 7.90 | % |
Total annual operating expenses, as disclosed in the Fund’s prospectus dated September 28, 2015, were 1.91% of average daily net assets (1.41% after fee waivers/expense reimbursements by Cloud Capital LLC (the “Adviser”)). Effective February 1, 2014, the Adviser has contractually agreed to waive its management fee in its entirety. This waiver is not subject to recoupment and will continue through September 30, 2016. Additionally, the Adviser has contractually agreed to waive or limit its fees and to assume other expenses of the Fund through September 30, 2016, so that Total Annual Fund Operating Expenses do 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 prior to February 1, 2014, 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 years, less any reimbursement previously paid, provided total expense do not exceed the limitation set forth above. This agreement may only be terminated by mutual consent of the Adviser and the Board of Trustees.
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 may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling (877) 670-2227.
(a) | Return figures reflect any change in price per share and assume the reinvestment of all distributions. |
(b) | The S&P 500® Index, Russell 1000® Equal Weight Index, Russell 2000® Equal Weight Index and the Russell 3000® Index are unmanaged indices that assume reinvestment of all distributions and exclude the effect of taxes and fees. These indices are widely recognized unmanaged indices of equity prices and are representative of a broader market and range of securities than are found in the Fund’s portfolio. Individuals cannot invest directly in these indices; however, an individual can invest in exchange-traded funds or other investment vehicles that attempt to track the performance of a benchmark index. |
(c) | Effective January 19, 2015, the Fund (formerly known as the Cloud Capital Strategic Large Cap Fund) adopted a new investment objective and strategy. The Trust has designated the Russell 3000 Index as the Fund’s primary benchmark index as it is more representative of the Fund’s investment objective and strategy. |
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 (877) 670-2227. Please read it carefully before investing.
The Fund is distributed by Unified Financial Securities, LLC Member FINRA.
Semi-Annual Report
1
Fund Holdings – (Unaudited) |
(a) | As a percent of net assets. |
The investment objective of the Cloud Capital Strategic All Cap Fund is long-term capital appreciation.
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, which is available on the SEC’s web site at www.sec.gov. The Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Semi-Annual Report
2
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, 2015 to November 30, 2015.
Actual Expenses
The first line of the table 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 “Expenses Paid During the Period Ended November 30, 2015” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table 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.
Beginning June 1, 2015 | Ending Account Value November 30, 2015 | Expenses November 30, 2015 (a) | ||||||||
Cloud Capital Strategic All Cap Fund – Institutional Class |
| |||||||||
Actual | $1,000.00 | $ | 964.30 | $ | 7.07 | |||||
Hypothetical (b) | $1,000.00 | $ | 1017.80 | $ | 7.26 |
(a) | Expenses are equal to the Fund’s annualized expense ratio of 1.44%, multiplied by the average account value over the period, multiplied by 183/366. |
(b) | Assumes a 5% return before expenses. |
Semi-Annual Report
3
Cloud Capital Strategic All Cap Fund | November 30, 2015 |
Schedule of Investments – (Unaudited) |
Shares | Fair Value | |||||||||
| Common Stocks — 88.5% | |||||||||
| Consumer Discretionary — 9.7% | |||||||||
565 | Aaron’s, Inc. | $ | 13,710 | |||||||
114 | Advance Auto Parts, Inc. | 18,480 | ||||||||
37,400 | Aeropostale, Inc. * | 20,204 | ||||||||
37 | Amazon.com, Inc. * | 24,838 | ||||||||
316 | AMC Networks, Inc., Class A * | 25,684 | ||||||||
1,415 | American Eagle Outfitters, Inc. | 22,039 | ||||||||
2,035 | Apollo Education Group, Inc., Class A * | 14,365 | ||||||||
1,818 | Ascena Retail Group, Inc. * | 20,600 | ||||||||
240 | AutoNation, Inc. * | 15,361 | ||||||||
20 | AutoZone, Inc. * | 15,793 | ||||||||
1,630 | Barnes & Noble, Inc. | 20,860 | ||||||||
234 | Bed Bath & Beyond, Inc. * | 12,776 | ||||||||
474 | Best Buy Co., Inc. | 15,074 | ||||||||
462 | Big Lots, Inc. | 20,789 | ||||||||
497 | Bob Evans Farms, Inc. | 19,790 | ||||||||
324 | BorgWarner, Inc. | 13,825 | ||||||||
454 | Brinker International, Inc. | 20,703 | ||||||||
521 | Cabela’s, Inc., Class A * | 24,426 | ||||||||
617 | Cablevision Systems Corp. | 18,806 | ||||||||
242 | CarMax, Inc. * | 13,852 | ||||||||
299 | Carnival Corp. | 15,105 | ||||||||
238 | Carter’s, Inc. | 20,560 | ||||||||
317 | CBS Corp., Class B | 16,012 | ||||||||
257 | CEB, Inc. | 19,845 | ||||||||
421 | Cheesecake Factory, Inc./The | 19,863 | ||||||||
1,504 | Chico’s FAS, Inc. | 18,050 | ||||||||
20 | Chipotle Mexican Grill, Inc. * | 11,489 | ||||||||
644 | Cinemark Holdings, Inc. | 22,351 | ||||||||
492 | Coach, Inc. | 15,644 | ||||||||
255 | Comcast Corp., Class A | 15,544 | ||||||||
621 | CST Brands, Inc. | 23,112 | ||||||||
470 | D.R. Horton, Inc. | 15,186 | ||||||||
210 | Darden Restaurants, Inc. | 11,791 | ||||||||
361 | Deckers Outdoor Corp. * | 17,679 | ||||||||
199 | Delphi Automotive PLC | 17,455 | ||||||||
779 | DeVry Education Group, Inc. | 18,499 | ||||||||
469 | Dick’s Sporting Goods, Inc. | 18,324 | ||||||||
3 | Dillard’s, Inc., Class A | 225 | ||||||||
543 | Discovery Communications, Inc., Class A * | 16,897 | ||||||||
187 | Dollar General Corp. | 12,235 | ||||||||
375 | Dollar Tree, Inc. * | 28,265 | ||||||||
215 | Domino’s Pizza, Inc. | 23,142 | ||||||||
1,066 | DreamWorks Animation SKG, Inc., Class A * | 26,272 | ||||||||
128 | Expedia, Inc. | 15,786 | ||||||||
312 | Foot Locker, Inc. | 20,287 |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Consumer Discretionary — (Continued) | |||||||||
1,073 | Ford Motor Co. | $ | 15,376 | |||||||
238 | Fossil Group, Inc. * | 9,163 | ||||||||
327 | GameStop Corp., Class A | 11,453 | ||||||||
597 | Gannett Co., Inc. | 16,854 | ||||||||
440 | Gap, Inc./The | 11,751 | ||||||||
383 | Garmin Ltd. | 14,480 | ||||||||
511 | General Motors Co. | 18,503 | ||||||||
1,394 | Gentex Corp. | 23,331 | ||||||||
176 | Genuine Parts Co. | 15,918 | ||||||||
498 | Goodyear Tire & Rubber Co./The | 17,384 | ||||||||
23 | Graham Holdings Co. | 12,330 | ||||||||
969 | Guess?, Inc. | 19,078 | ||||||||
437 | H&R Block, Inc. | 16,017 | ||||||||
770 | Hanesbrands, Inc. | 23,602 | ||||||||
262 | Harley-Davidson, Inc. | 12,820 | ||||||||
154 | Harman International Industries, Inc. | 15,836 | ||||||||
198 | Hasbro, Inc. | 14,455 | ||||||||
126 | Home Depot, Inc./The | 16,818 | ||||||||
362 | HSN, Inc. | 18,068 | ||||||||
885 | International Game Technology PLC | 13,747 | ||||||||
606 | International Speedway Corp., Class A | 21,566 | ||||||||
763 | Interpublic Group of Cos., Inc./The | 17,541 | ||||||||
455 | Jarden Corp. * | 21,225 | ||||||||
383 | John Wiley & Sons, Inc., Class A | 19,761 | ||||||||
350 | Johnson Controls, Inc. | 16,096 | ||||||||
1,502 | KB Home | 21,168 | ||||||||
281 | Kohl’s Corp. | 13,267 | ||||||||
180 | L Brands, Inc. | 17,194 | ||||||||
308 | Leggett & Platt, Inc. | 14,356 | ||||||||
275 | Lennar Corp., Class A | 14,098 | ||||||||
788 | LKQ Corp. * | 23,228 | ||||||||
208 | Lowe’s Companies, Inc. | 15,928 | ||||||||
246 | Macy’s, Inc. | 9,595 | ||||||||
210 | Marriott International, Inc., Class A | 14,865 | ||||||||
664 | Mattel, Inc. | 16,517 | ||||||||
392 | Matthews International Corp., Class A | 23,421 | ||||||||
151 | McDonald’s Corp. | 17,284 | ||||||||
763 | MDC Holdings, Inc. | 20,003 | ||||||||
484 | Meredith Corp. | 22,576 | ||||||||
363 | Michael Kors Holdings Ltd. * | 15,611 | ||||||||
175 | Mohawk Industries, Inc. * | 33,415 | ||||||||
136 | Netflix, Inc. * | 16,809 | ||||||||
1,702 | New York Times Co./The, Class A | 23,968 | ||||||||
353 | Newell Rubbermaid, Inc. | 15,756 |
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
4
Cloud Capital Strategic All Cap Fund | November 30, 2015 |
Schedule of Investments – (Unaudited) (Continued) |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Consumer Discretionary — (Continued) | |||||||||
1,093 | News Corp., Class A | $ | 15,685 | |||||||
135 | NIKE, Inc., Class B | 17,841 | ||||||||
208 | Nordstrom, Inc. | 11,731 | ||||||||
13 | NVR, Inc. * | 22,300 | ||||||||
2,964 | Office Depot, Inc. * | 19,531 | ||||||||
213 | Omnicom Group, Inc. | 15,753 | ||||||||
60 | O’Reilly Automotive, Inc. * | 15,902 | ||||||||
118 | Panera Bread Co., Class A * | 21,502 | ||||||||
205 | Polaris Industries, Inc. | 21,633 | ||||||||
12 | Priceline Group, Inc./The * | 14,788 | ||||||||
710 | PulteGroup, Inc. | 13,836 | ||||||||
131 | PVH Corp. | 11,942 | ||||||||
130 | Ralph Lauren Corp. | 16,137 | ||||||||
1,696 | Regis Corp. * | 28,255 | ||||||||
845 | Rent-A-Center, Inc. | 14,499 | ||||||||
288 | Ross Stores, Inc. | 14,979 | ||||||||
547 | Scholastic Corp. | 23,369 | ||||||||
2,112 | Scientific Games Corp., Class A * | 19,476 | ||||||||
270 | Scripps Networks Interactive, Inc., Class A | 15,363 | ||||||||
762 | Service Corp. International | 21,224 | ||||||||
149 | Signet Jewelers Ltd. | 19,596 | ||||||||
648 | Sotheby’s | 18,355 | ||||||||
1,070 | Staples, Inc. | 12,916 | ||||||||
273 | Starbucks Corp. | 16,772 | ||||||||
201 | Starwood Hotels & Resorts Worldwide, Inc. | 14,416 | ||||||||
362 | Strayer Education, Inc. * | 21,400 | ||||||||
187 | Target Corp. | 13,572 | ||||||||
306 | Tempur Sealy International, Inc. * | 24,306 | ||||||||
406 | Thor Industries, Inc. | 23,504 | ||||||||
170 | Tiffany & Co. | 13,571 | ||||||||
78 | Time Warner Cable, Inc., Class A | 14,417 | ||||||||
203 | Time Warner, Inc. | 14,208 | ||||||||
202 | TJX Cos., Inc./The | 14,250 | ||||||||
594 | Toll Brothers, Inc. * | 22,071 | ||||||||
254 | Tractor Supply Co. | �� | 22,678 | |||||||
209 | TripAdvisor, Inc. * | 17,242 | ||||||||
364 | Tupperware Brands Corp. | 20,661 | ||||||||
523 | Twenty-First Century Fox, Inc. | 15,437 | ||||||||
218 | Under Armour, Inc., Class A * | 18,819 | ||||||||
486 | Urban Outfitters, Inc. * | 10,876 | ||||||||
201 | VF Corp. | 13,022 | ||||||||
364 | Viacom, Inc., Class B | 18,135 | ||||||||
145 | Walt Disney Co./The | 16,436 | ||||||||
2,441 | Wendy’s Co./The | 25,654 | ||||||||
84 | Whirlpool Corp. | 13,596 | ||||||||
216 | Williams-Sonoma, Inc. | 13,685 |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Consumer Discretionary — (Continued) | |||||||||
191 | Wyndham Worldwide Corp. | $ | 14,489 | |||||||
182 | Wynn Resorts Ltd. | 11,396 | ||||||||
184 | Yum! Brands, Inc. | 13,349 | ||||||||
2,418,400 | ||||||||||
| Consumer Staples – 10.2% | |||||||||
598 | Altria Group, Inc. | 34,421 | ||||||||
710 | Archer-Daniels-Midland Co. | 25,911 | ||||||||
6,776 | Avon Products, Inc. | 23,378 | ||||||||
311 | Brown-Forman Corp., Class B | 31,913 | ||||||||
653 | Campbell Soup Co. | 34,131 | ||||||||
1,076 | Church & Dwight Co., Inc. | 92,270 | ||||||||
281 | Clorox Co./The | 34,984 | ||||||||
817 | Coca-Cola Co./The | 34,809 | ||||||||
615 | Coca-Cola Enterprises, Inc. | 30,914 | ||||||||
496 | Colgate-Palmolive Co. | 32,597 | ||||||||
754 | ConAgra Foods, Inc. | 30,864 | ||||||||
257 | Constellation Brands, Inc., Class A | 36,116 | ||||||||
230 | Costco Wholesale Corp. | 37,096 | ||||||||
305 | CVS Health Corp. | 28,659 | ||||||||
5,587 | Dean Foods Co. | 104,819 | ||||||||
405 | Dr. Pepper Snapple Group, Inc. | 36,336 | ||||||||
1,067 | Edgwell Personal Care Co. | 85,905 | ||||||||
400 | Estee Lauder Cos., Inc./The, Class A | 33,642 | ||||||||
4,051 | Flowers Foods, Inc. | 95,278 | ||||||||
566 | General Mills, Inc. | 32,705 | ||||||||
356 | Hershey Co./The | 30,694 | ||||||||
519 | Hormel Foods Corp. | 38,889 | ||||||||
1,060 | Ingredion, Inc. | 104,452 | ||||||||
286 | JM Smucker Co./The | 34,616 | ||||||||
473 | Kellogg Co. | 32,520 | ||||||||
1,819 | Keurig Green Mountain, Inc. | 95,314 | ||||||||
290 | Kimberly-Clark Corp. | 34,551 | ||||||||
435 | Kraft Heinz Co./The | 32,032 | ||||||||
901 | Kroger Co./The | 33,937 | ||||||||
973 | Lancaster Colony Corp. | 113,083 | ||||||||
398 | McCormick & Co., Inc. | 34,194 | ||||||||
405 | Mead Johnson Nutrition Co. | 32,616 | ||||||||
464 | Molson Coors Brewing Co., Class B | 42,704 | ||||||||
737 | Mondelez International, Inc., Class A | 32,161 | ||||||||
229 | Monster Beverage Corp. * | 35,432 | ||||||||
337 | PepsiCo, Inc. | 33,752 |
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
5
Cloud Capital Strategic All Cap Fund | November 30, 2015 |
Schedule of Investments – (Unaudited) (Continued) |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Consumer Staples — (Continued) | |||||||||
395 | Philip Morris International, Inc. | $ | 34,554 | |||||||
1,470 | Post Holdings, Inc. * | 102,209 | ||||||||
445 | Procter & Gamble Co./The | 33,280 | ||||||||
771 | Reynolds American, Inc. | 35,647 | ||||||||
11,186 | SUPERVALU, Inc. * | 75,172 | ||||||||
790 | Sysco Corp. | 32,474 | ||||||||
3,022 | Tootsie Roll Industries, Inc. | 96,847 | ||||||||
763 | Tyson Foods, Inc., Class A | 38,171 | ||||||||
1,907 | United Natural Foods, Inc. * | 83,741 | ||||||||
1,958 | Universal Corp. | 110,719 | ||||||||
370 | Walgreens Boots Alliance, Inc. | 31,132 | ||||||||
475 | Wal-Mart Stores, Inc. | 27,933 | ||||||||
1,386 | WestRock Co. | 70,194 | ||||||||
2,063 | WhiteWave Foods Co./The * | 83,801 | ||||||||
1,005 | Whole Foods Market, Inc. | 29,289 | ||||||||
2,542,858 | ||||||||||
| Energy – 10.1% | |||||||||
394 | Anadarko Petroleum Corp. | 23,618 | ||||||||
630 | Apache Corp. | 30,969 | ||||||||
17,620 | Arch Coal Inc * | 21,849 | ||||||||
4,130 | Atwood Oceanics, Inc. | 65,582 | ||||||||
552 | Baker Hughes, Inc. | 29,867 | ||||||||
16,258 | Bill Barrett Corp. * | 102,097 | ||||||||
1,146 | Cabot Oil & Gas Corp. | 21,588 | ||||||||
597 | Cameron International Corp. * | 40,789 | ||||||||
2,773 | CARBO Ceramics, Inc. | 51,691 | ||||||||
3,895 | Chesapeake Energy Corp. | 20,526 | ||||||||
358 | Chevron Corp. | 32,663 | ||||||||
647 | Cimarex Energy Co. | 76,994 | ||||||||
600 | ConocoPhillips | 32,404 | ||||||||
2,162 | Consol Energy, Inc. | 17,035 | ||||||||
7,738 | Denbury Resources, Inc. | 28,632 | ||||||||
661 | Devon Energy Corp. | 30,426 | ||||||||
1,219 | Diamond Offshore Drilling, Inc. | 27,584 | ||||||||
1,170 | Dril-Quip, Inc. * | 73,866 | ||||||||
1,405 | Energen Corp. | 83,280 | ||||||||
1,708 | Ensco PLC, Class A | 29,246 | ||||||||
364 | EOG Resources, Inc. | 30,375 | ||||||||
355 | EQT Corp. | 20,310 | ||||||||
376 | Exxon Mobil Corp. | 30,702 | ||||||||
879 | FMC Technologies, Inc. * | 29,900 | ||||||||
748 | Halliburton Co. | 29,802 | ||||||||
11,388 | Helix Energy Solutions Group, Inc. * | 73,793 | ||||||||
496 | Helmerich & Payne, Inc. | 28,873 |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Energy — (Continued) | |||||||||
497 | Hess Corp. | $ | 29,317 | |||||||
1,413 | HollyFrontier Corp. | 67,943 | ||||||||
856 | Kinder Morgan, Inc. | 20,165 | ||||||||
1,749 | Marathon Oil Corp. | 30,625 | ||||||||
570 | Marathon Petroleum Corp. | 33,284 | ||||||||
926 | Murphy Oil Corp. | 26,456 | ||||||||
2,718 | Nabors Industries Ltd. | 27,484 | ||||||||
695 | National Oilwell Varco, Inc. | 25,962 | ||||||||
886 | Newfield Exploration Co. * | 33,911 | ||||||||
2,280 | Noble Corp. PLC | 30,261 | ||||||||
2,898 | Noble Energy, Inc. | 106,286 | ||||||||
388 | Occidental Petroleum Corp. | 29,334 | ||||||||
1,738 | Oceaneering International, Inc. | 76,030 | ||||||||
2,703 | Oil States International, Inc.* | 85,740 | ||||||||
4,857 | Patterson-UTI Energy, Inc. | 78,785 | ||||||||
1,042 | Peabody Energy Corp. | 11,876 | ||||||||
361 | Phillips 66 | 33,064 | ||||||||
227 | Pioneer Natural Resources Co. | 32,839 | ||||||||
2,161 | QEP Resources, Inc. | 34,136 | ||||||||
760 | Range Resources Corp. | 21,711 | ||||||||
1,676 | Rowan Cos. PLC | 34,063 | ||||||||
350 | Schlumberger Ltd. | 26,968 | ||||||||
2,110 | SM Energy Co. | 61,979 | ||||||||
1,621 | Southwestern Energy Co. * | 14,609 | ||||||||
963 | Spectra Energy Corp. | 25,231 | ||||||||
4,945 | Superior Energy Services, Inc. | 77,484 | ||||||||
286 | Tesoro Corp. | 32,896 | ||||||||
4,230 | Tidewater, Inc. | 40,230 | ||||||||
2,083 | Transocean Ltd. | 29,909 | ||||||||
5,106 | Unit Corp. * | 92,263 | ||||||||
442 | Valero Energy Corp. | 31,746 | ||||||||
550 | Williams Cos., Inc./The | 20,096 | ||||||||
1,710 | World Fuel Services Corp. | 74,527 | ||||||||
4,150 | WPX Energy, Inc. * | 35,606 | ||||||||
2,517,277 | ||||||||||
| Financials — 7.6% | |||||||||
139 | ACE Ltd. | 15,960 | ||||||||
86 | Affiliated Managers Group, Inc. * | 15,194 | ||||||||
248 | Aflac, Inc. | 16,211 | ||||||||
229 | Alexander & Baldwin, Inc. | 8,682 | ||||||||
34 | Alleghany Corp. * | 17,564 | ||||||||
240 | Allstate Corp. | 15,070 | ||||||||
190 | American Express Co. | 13,584 |
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
6
Cloud Capital Strategic All Cap Fund | November 30, 2015 |
Schedule of Investments – (Unaudited) (Continued) |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Financials — (Continued) | |||||||||
232 | American Financial Group, Inc. | $ | 17,183 | |||||||
248 | American International Group, Inc. | 15,770 | ||||||||
130 | Ameriprise Financial, Inc. | 14,657 | ||||||||
155 | Aon PLC | 14,660 | ||||||||
2,631 | Apollo Investment Corp. (a) | 16,707 | ||||||||
369 | Arthur J Gallagher & Co. | 16,122 | ||||||||
349 | Aspen Insurance Holdings Ltd. | 17,631 | ||||||||
901 | Associated Banc-Corp. | 18,480 | ||||||||
198 | Assurant, Inc. | 16,918 | ||||||||
1,023 | Astoria Financial Corp. | 16,484 | ||||||||
693 | BancorpSouth, Inc. | 18,645 | ||||||||
913 | Bank of America Corp. | 15,906 | ||||||||
260 | Bank of Hawaii Corp. | 17,990 | ||||||||
362 | Bank of New York Mellon Corp./The | 15,863 | ||||||||
397 | BB&T Corp. | 15,320 | ||||||||
109 | Berkshire Hathaway, Inc., Class B * | 14,623 | ||||||||
47 | BlackRock, Inc. | 17,259 | ||||||||
506 | Brown & Brown, Inc. | 16,420 | ||||||||
195 | Capital One Financial Corp. | 15,275 | ||||||||
553 | Cathay General Bancorp | 18,966 | ||||||||
262 | CBOE Holdings, Inc. | 18,911 | ||||||||
430 | CBRE Group, Inc. * | 16,128 | ||||||||
478 | Charles Schwab Corp./The | 16,121 | ||||||||
119 | Chubb Corp./The | 15,584 | ||||||||
277 | Cincinnati Financial Corp. | 16,928 | ||||||||
276 | Citigroup, Inc. | 14,938 | ||||||||
160 | CME Group, Inc. | 15,672 | ||||||||
348 | Comerica, Inc. | 16,132 | ||||||||
383 | Commerce Bancshares, Inc. | 17,565 | ||||||||
192 | Crown Castle International Corp. | 16,469 | ||||||||
259 | Cullen/Frost Bankers, Inc. | 18,045 | ||||||||
272 | Discover Financial Services | 15,463 | ||||||||
578 | E*TRADE Financial Corp. * | 17,585 | ||||||||
406 | East West Bancorp, Inc. | 17,622 | ||||||||
458 | Eaton Vance Corp. | 16,465 | ||||||||
47 | Everest Re Group Ltd. | 8,634 | ||||||||
524 | Federated Investors, Inc., Class B | 16,408 | ||||||||
760 | Fifth Third Bancorp | 15,719 | ||||||||
404 | First American Financial Corp. | 15,938 | ||||||||
1,144 | First Horizon National Corp. | 17,009 |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Financials — (Continued) | |||||||||
1,804 | First Niagara Financial Group, Inc. | $ | 19,447 | |||||||
924 | FirstMerit Corp. | 18,689 | ||||||||
932 | FNF Group, Class A | 33,421 | ||||||||
357 | Franklin Resources, Inc. | 14,947 | ||||||||
1,328 | Fulton Financial Corp. | 19,220 | ||||||||
3,144 | Genworth Financial, Inc., Class A * | 15,875 | ||||||||
78 | Goldman Sachs Group, Inc./The | 14,914 | ||||||||
462 | Greenhill & Co., Inc. | 12,252 | ||||||||
621 | Hancock Holding Co. | 18,097 | ||||||||
206 | Hanover Insurance Group, Inc. | 17,439 | ||||||||
317 | Hartford Financial Services Group, Inc./The | 14,488 | ||||||||
63 | Intercontinental Exchange Group, Inc. | 16,254 | ||||||||
642 | International Bancshares Corp. | 19,578 | ||||||||
433 | Invesco Ltd. | 14,602 | ||||||||
1,089 | Janus Capital Group, Inc. | 17,198 | ||||||||
206 | Hanover Insurance Group, Inc. | 17,439 | ||||||||
104 | Jones Lang LaSalle, Inc. | 17,267 | ||||||||
233 | JPMorgan Chase & Co. | 15,554 | ||||||||
452 | Kemper Corp. | 18,576 | ||||||||
1,086 | KeyCorp | 14,233 | ||||||||
322 | Legg Mason, Inc. | 14,274 | ||||||||
690 | Leucadia National Corp. | 12,205 | ||||||||
295 | Lincoln National Corp. | 16,197 | ||||||||
397 | Loews Corp. | 15,026 | ||||||||
121 | M&T Bank Corp. | 15,195 | ||||||||
268 | Marsh & McLennan Cos., Inc. | 14,827 | ||||||||
153 | McGraw Hill Financial, Inc. | 14,735 | ||||||||
317 | Mercury General Corp. | 16,415 | ||||||||
299 | MetLife, Inc. | 15,297 | ||||||||
142 | Moody’s Corp. | 14,671 | ||||||||
437 | Morgan Stanley | 14,981 | ||||||||
270 | MSCI, Inc., Class A | 18,901 | ||||||||
284 | NASDAQ OMX Group, Inc./The | 16,660 | ||||||||
940 | New York Community Bancorp, Inc. | 15,408 | ||||||||
209 | Northern Trust Corp. | 15,637 | ||||||||
1,040 | Old Republic International Corp. | 19,719 | ||||||||
949 | People’s United Financial, Inc. | 15,892 | ||||||||
162 | PNC Financial Services Group, Inc./The | 15,498 |
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
7
Cloud Capital Strategic All Cap Fund | November 30, 2015 |
Schedule of Investments – (Unaudited) (Continued) |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Financials — (Continued) | |||||||||
377 | Primerica, Inc. | $ | 19,333 | |||||||
280 | Principal Financial Group, Inc. | 14,419 | ||||||||
488 | Progressive Corp./The | 15,049 | ||||||||
325 | Prosperity Bancshares, Inc. | 18,002 | ||||||||
185 | Prudential Financial, Inc. | 16,017 | ||||||||
311 | Raymond James Financial, Inc. | 18,237 | ||||||||
1,572 | Regions Financial Corp. | 15,945 | ||||||||
180 | Reinsurance Group of America, Inc. | 16,561 | ||||||||
43 | Royal Bank of Canada | 2,444 | ||||||||
323 | SEI Investments Co. | 17,579 | ||||||||
121 | Signature Bank * | 19,123 | ||||||||
1,780 | SLM Corp. * | 12,022 | ||||||||
141 | StanCorp Financial Group, Inc. | 16,046 | ||||||||
205 | State Street Corp. | 14,846 | ||||||||
368 | SunTrust Banks, Inc. | 15,976 | ||||||||
133 | SVB Financial Group * | 17,595 | ||||||||
551 | Synovus Financial Corp. | 18,405 | ||||||||
204 | T. Rowe Price Group, Inc. | 15,535 | ||||||||
1,056 | TCF Financial Corp. | 16,179 | ||||||||
252 | Torchmark Corp. | 15,277 | ||||||||
143 | Travelers Cos., Inc./The | 16,384 | ||||||||
711 | Trustmark Corp. | 17,956 | ||||||||
348 | U.S. Bancorp | 15,270 | ||||||||
443 | Unum Group | 16,263 | ||||||||
1,723 | Valley National Bancorp | 19,190 | ||||||||
298 | W.R. Berkley Corp. | 16,609 | ||||||||
418 | Waddell & Reed Financial, Inc., Class A | 15,617 | ||||||||
727 | Washington Federal, Inc. | 18,781 | ||||||||
458 | Webster Financial Corp. | 18,408 | ||||||||
274 | Wells Fargo & Co. | 15,085 | ||||||||
328 | Westamerica Bancorp | 16,072 | ||||||||
389 | XL Group PLC | 14,850 | ||||||||
522 | Zions Bancorp. | 15,652 | ||||||||
1,900,796 | ||||||||||
| Health Care — 9.6% | |||||||||
491 | Abbott Laboratories | 22,067 | ||||||||
346 | AbbVie, Inc. | 20,102 | ||||||||
194 | Aetna, Inc. | 19,958 | ||||||||
622 | Agilent Technologies, Inc. | 26,013 | ||||||||
130 | Alexion Pharmaceuticals, Inc. * | 23,172 | ||||||||
221 | Allergan PLC * | 69,316 | ||||||||
3,163 | Allscripts Healthcare Solutions, Inc. * | 48,165 | ||||||||
221 | AmerisourceBergen Corp. | 21,776 | ||||||||
145 | Amgen, Inc. | 23,336 | ||||||||
155 | Anthem, Inc. | 20,233 |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Health Care — (Continued) | |||||||||
591 | Baxter International, Inc. | $ | 22,251 | |||||||
319 | Becton Dickinson and Co. | 47,888 | ||||||||
76 | Biogen Idec, Inc. * | 21,807 | ||||||||
308 | Bio-Rad Laboratories, Inc., Class A * | 43,041 | ||||||||
434 | Bio-Techne Corp. | 39,547 | ||||||||
1,381 | Boston Scientific Corp. * | 25,252 | ||||||||
368 | Bristol-Myers Squibb Co. | 24,648 | ||||||||
118 | C.R. Bard, Inc. | 22,039 | ||||||||
278 | Cardinal Health, Inc. | 24,146 | ||||||||
188 | Celgene Corp. * | 20,623 | ||||||||
359 | Cerner Corp. * | 21,414 | ||||||||
629 | Charles River Laboratories International, Inc. * | 48,192 | ||||||||
159 | Cigna Corp. | 21,481 | ||||||||
785 | Community Health Systems, Inc.* | 22,717 | ||||||||
264 | Cooper Cos., Inc./The | 38,643 | ||||||||
295 | DaVita HealthCare Partners, Inc. * | 21,576 | ||||||||
423 | DENTSPLY International, Inc. | 25,645 | ||||||||
162 | Edwards LifeSciences Corp. * | 26,423 | ||||||||
271 | Eli Lilly & Co. | 22,193 | ||||||||
562 | Endo International PLC * | 34,550 | ||||||||
267 | Express Scripts Holding Co. * | 22,820 | ||||||||
212 | Gilead Sciences, Inc. | 22,490 | ||||||||
654 | Health Net, Inc. * | 41,383 | ||||||||
312 | Henry Schein, Inc. * | 48,790 | ||||||||
820 | Hill-Rom Holdings, Inc. | 41,749 | ||||||||
3,981 | HMS Holdings Corp. * | 48,292 | ||||||||
1,092 | Hologic, Inc. * | 44,066 | ||||||||
123 | Humana, Inc. | 20,791 | ||||||||
583 | IDEXX Laboratories, Inc. * | 41,291 | ||||||||
44 | Intuitive Surgical, Inc. * | 22,968 | ||||||||
237 | Johnson & Johnson | 23,949 | ||||||||
549 | Laboratory Corp. of America Holdings * | 66,693 | ||||||||
539 | LifePoint Health, Inc. * | 38,574 | ||||||||
493 | Mallinckrodt PLC * | 33,496 | ||||||||
1,051 | Masimo Corp. * | 43,614 | ||||||||
110 | McKesson Corp. | 20,921 | ||||||||
535 | Mednax, Inc. * | 38,212 | ||||||||
612 | Medtronic PLC | 46,133 | ||||||||
406 | Merck & Co., Inc. | 21,517 | ||||||||
142 | Mettler-Toledo International, Inc. * | 48,718 | ||||||||
437 | Mylan NV * | 22,403 | ||||||||
1,289 | Owens & Minor, Inc. | 49,631 | ||||||||
458 | Patterson Companies, Inc. | 20,886 | ||||||||
474 | PerkinElmer, Inc. | 25,187 | ||||||||
123 | Perrigo Co. PLC (Ireland) | 18,334 |
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
8
Cloud Capital Strategic All Cap Fund | November 30, 2015 |
Schedule of Investments – (Unaudited) (Continued) |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Health Care — (Continued) | |||||||||
678 | Pfizer, Inc. | $ | 22,219 | |||||||
323 | Quest Diagnostics, Inc. | 22,085 | ||||||||
43 | Regeneron Pharmaceuticals, Inc. * | 23,180 | ||||||||
842 | ResMed, Inc. | 50,146 | ||||||||
329 | St Jude Medical, Inc. | 20,768 | ||||||||
672 | STERIS PLC | 51,299 | ||||||||
230 | Stryker Corp. | 22,143 | ||||||||
334 | Teleflex, Inc. | 43,962 | ||||||||
462 | Tenet Healthcare Corp. * | 15,343 | ||||||||
177 | Thermo Fisher Scientific, Inc. | 24,454 | ||||||||
267 | United Therapeutics Corp. * | 40,702 | ||||||||
197 | UnitedHealth Group, Inc. | 22,207 | ||||||||
323 | Universal Health Services, Inc., Class B | 39,223 | ||||||||
275 | Varian Medical Systems, Inc. * | 22,175 | ||||||||
771 | VCA, Inc. * | 42,444 | ||||||||
523 | Vertex Pharmaceuticals, Inc. * | 67,706 | ||||||||
183 | Waters Corp. * | 24,331 | ||||||||
501 | WellCare Health Plans, Inc. * | 41,332 | ||||||||
221 | Zimmer Holdings, Inc. | 22,351 | ||||||||
554 | Zoetis, Inc. | 25,872 | ||||||||
2,385,064 | ||||||||||
| Industrials – 9.9% | |||||||||
126 | 3M Co. | 19,761 | ||||||||
95 | Acuity Brands, Inc. | 22,038 | ||||||||
573 | ADT Corp./The | 20,312 | ||||||||
1,354 | AECOM * | 43,086 | ||||||||
378 | AGCO Corp. | 18,995 | ||||||||
245 | Alaska Air Group, Inc. | 19,543 | ||||||||
297 | Allegion PLC | 19,954 | ||||||||
683 | AMETEK, Inc. | 38,572 | ||||||||
669 | Avery Dennison Corp. | 44,131 | ||||||||
383 | B/E Aerospace, Inc. | 17,701 | ||||||||
137 | Boeing Co./The | 19,898 | ||||||||
642 | Brink’s Co./The | 20,670 | ||||||||
189 | Carlisle Cos., Inc. | 16,704 | ||||||||
256 | Caterpillar, Inc. | 18,603 | ||||||||
268 | CH Robinson Worldwide, Inc. | 18,060 | ||||||||
212 | Cintas Corp. | 19,393 | ||||||||
328 | CLARCOR, Inc. | 17,344 | ||||||||
372 | Clean Harbors, Inc. * | 16,122 | ||||||||
531 | Copart, Inc. * | 20,971 | ||||||||
353 | Crane Co. | 18,353 | ||||||||
666 | CSX Corp. | 18,934 | ||||||||
162 | Cummins, Inc. | 16,234 | ||||||||
207 | Danaher Corp. | 19,925 |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Industrials — (Continued) | |||||||||
234 | Deere & Co. | $ | 18,586 | |||||||
477 | Delta Air Lines, Inc. | 22,179 | ||||||||
313 | Deluxe Corp. | 18,383 | ||||||||
579 | Donaldson Co., Inc. | 18,181 | ||||||||
301 | Dover Corp. | 19,830 | ||||||||
171 | Dun & Bradstreet Corp./The | 18,451 | ||||||||
342 | Eaton Corp. PLC | 19,915 | ||||||||
391 | Emerson Electric Co. | 19,541 | ||||||||
185 | Equifax, Inc. | 20,576 | ||||||||
224 | Esterline Technologies Corp. * | 21,300 | ||||||||
373 | Expeditors International of Washington, Inc. | 18,096 | ||||||||
492 | Fastenal Co. | 19,983 | ||||||||
118 | FedEx Corp. | 18,786 | ||||||||
428 | Flowserve Corp. | 19,801 | ||||||||
408 | Fluor Corp. | 19,851 | ||||||||
372 | Fortune Brands Home & Security, Inc. | 20,429 | ||||||||
453 | FTI Consulting, Inc. * | 16,922 | ||||||||
391 | GATX Corp. | 18,105 | ||||||||
1,312 | General Cable Corp. | 19,995 | ||||||||
128 | General Dynamics Corp. | 18,762 | ||||||||
740 | General Electric Co. | 22,146 | ||||||||
271 | Genesee & Wyoming, Inc., Class A * | 18,802 | ||||||||
274 | Graco, Inc. | 20,658 | ||||||||
559 | Granite Construction, Inc. | 22,775 | ||||||||
1,613 | Harsco Corp. | 16,836 | ||||||||
651 | Herman Miller, Inc. | 20,628 | ||||||||
395 | HNI Corp. | 17,479 | ||||||||
186 | Honeywell International, Inc. | 19,293 | ||||||||
186 | Hubbell, Inc., Class B | 18,453 | ||||||||
166 | Huntington Ingalls Industries, Inc. | 21,700 | ||||||||
258 | IDEX Corp. | 20,365 | ||||||||
216 | Illinois Tool Works, Inc. | 20,313 | ||||||||
333 | Ingersoll-Rand PLC | 19,520 | ||||||||
523 | ITT Corp. | 20,760 | ||||||||
466 | Jacobs Engineering Group, Inc.* | 20,585 | ||||||||
239 | JB Hunt Transport Services, Inc. | 18,685 | ||||||||
989 | Joy Global, Inc. | 15,185 | ||||||||
205 | Kansas City Southern | 18,662 | ||||||||
1,080 | KBR, Inc. | 20,993 | ||||||||
644 | Kennametal, Inc. | 18,843 | ||||||||
273 | Kirby Corp. * | 17,618 | ||||||||
166 | L-3 Communications Holdings, Inc. | 20,331 | ||||||||
270 | Landstar System, Inc. | 16,835 | ||||||||
154 | Lennox International, Inc. | 20,981 |
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
9
Cloud Capital Strategic All Cap Fund | November 30, 2015 |
Schedule of Investments – (Unaudited) (Continued) |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Industrials — (Continued) | |||||||||
324 | Lincoln Electric Holdings, Inc. | $ | 18,317 | |||||||
89 | Lockheed Martin Corp. | 19,454 | ||||||||
212 | ManpowerGroup | 19,161 | ||||||||
689 | Masco Corp. | 20,620 | ||||||||
488 | Matson, Inc. | 25,221 | ||||||||
415 | MSA Safety, Inc. | 19,467 | ||||||||
268 | MSC Industrial Direct Co., Inc., Class A | 16,514 | ||||||||
279 | Nordson Corp. | 20,263 | ||||||||
235 | Norfolk Southern Corp. | 22,318 | ||||||||
108 | Northrop Grumman Corp. | 20,055 | ||||||||
248 | Orbital ATK, Inc. | 21,325 | ||||||||
466 | Oshkosh Corp. | 20,460 | ||||||||
336 | PACCAR, Inc. | 17,443 | ||||||||
177 | Parker Hannifin Corp. | 18,544 | ||||||||
336 | Pentair PLC | 19,042 | ||||||||
906 | Pitney Bowes, Inc. | 19,578 | ||||||||
79 | Precision Castparts Corp. | 18,365 | ||||||||
882 | Quanta Services, Inc. * | 19,439 | ||||||||
172 | Raytheon Co. | 21,297 | ||||||||
270 | Regal Beloit Corp. | 17,386 | ||||||||
436 | Republic Services, Inc. | 19,149 | ||||||||
350 | Robert Half International, Inc. | 17,900 | ||||||||
173 | Rockwell Automation, Inc. | 18,463 | ||||||||
219 | Rockwell Collins, Inc. | 20,292 | ||||||||
658 | Rollins, Inc. | 17,854 | ||||||||
112 | Roper Technologies, Inc. | 21,758 | ||||||||
1,196 | RR Donnelley & Sons Co. | 19,239 | ||||||||
244 | Ryder System, Inc. | 16,091 | ||||||||
115 | Snap-on, Inc. | 19,844 | ||||||||
471 | Southwest Airlines Co. | 21,623 | ||||||||
312 | SPX Corp. | 3,443 | ||||||||
324 | SPX FLOW, Inc. * | 10,901 | ||||||||
186 | Stanley Black & Decker, Inc. | 20,340 | ||||||||
125 | Stericycle, Inc. * | 15,150 | ||||||||
834 | Terex Corp. | 17,089 | ||||||||
471 | Textron, Inc. | 20,078 | ||||||||
590 | Timken Co./The | 19,012 | ||||||||
148 | Towers Watson & Co., Class A | 19,901 | ||||||||
740 | Trinity Industries, Inc. | 20,090 | ||||||||
360 | Triumph Group, Inc. | 14,402 | ||||||||
512 | Tyco International PLC | 18,064 | ||||||||
212 | Union Pacific Corp. | 17,830 | ||||||||
185 | United Parcel Service, Inc., Class B | 19,019 | ||||||||
287 | United Rentals, Inc. * | 22,610 | ||||||||
192 | United Technologies Corp. | 18,468 | ||||||||
2,480 | UTi Worldwide, Inc. * | 17,360 | ||||||||
172 | Valmont Industries, Inc. | 20,185 | ||||||||
88 | W.W. Grainger, Inc. | 17,724 |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Industrials — (Continued) | |||||||||
194 | Wabtec Corp. | $ | 15,546 | |||||||
425 | Waste Connections, Inc. | 23,136 | ||||||||
356 | Waste Management, Inc. | 19,117 | ||||||||
148 | Watsco, Inc. | 18,782 | ||||||||
678 | Werner Enterprises, Inc. | 18,267 | ||||||||
409 | Woodward, Inc. | 20,630 | ||||||||
1,641 | Worthington Industries, Inc. | 50,507 | ||||||||
607 | Xylem, Inc. | 22,640 | ||||||||
2,448,195 | ||||||||||
| Information Technology — 9.6% | |||||||||
1,482 | 3D Systems Corp. * | 13,520 | ||||||||
166 | Accenture PLC, Class A | 17,845 | ||||||||
856 | ACI Worldwide, Inc. * | 20,133 | ||||||||
926 | Acxiom Corp. * | 21,196 | ||||||||
206 | Adobe Systems, Inc. * | 18,837 | ||||||||
1,208 | ADTRAN, Inc. | 19,696 | ||||||||
236 | Akamai Technologies, Inc. * | 13,569 | ||||||||
206 | Alliance Data Systems Corp. * | 59,070 | ||||||||
24 | Alphabet, Inc., Class A * | 18,590 | ||||||||
336 | Altera Corp. | 17,714 | ||||||||
313 | Amphenol Corp., Class A | 17,254 | ||||||||
296 | Analog Devices, Inc. | 18,263 | ||||||||
210 | ANSYS, Inc. * | 19,603 | ||||||||
147 | Apple, Inc. | 17,369 | ||||||||
1,019 | Applied Materials, Inc. | 19,119 | ||||||||
348 | Arrow Electronics, Inc. * | 19,677 | ||||||||
2,714 | Atmel Corp. | 23,477 | ||||||||
313 | Autodesk, Inc. * | 19,835 | ||||||||
205 | Automatic Data Processing, Inc. | 17,700 | ||||||||
463 | Avnet, Inc. | 20,983 | ||||||||
323 | Broadcom Corp., Class A | 17,658 | ||||||||
357 | Broadridge Financial Solutions, Inc. | 19,622 | ||||||||
585 | CA, Inc. | 16,441 | ||||||||
951 | Cadence Design Systems, Inc. * | 21,198 | ||||||||
872 | Ciena Corp. * | 21,845 | ||||||||
610 | Cisco Systems, Inc. | 16,627 | ||||||||
225 | Citrix Systems, Inc. * | 17,252 | ||||||||
253 | Cognizant Technology Solutions Corp., Class A * | 16,346 | ||||||||
512 | CommVault Systems, Inc. * | 20,986 | ||||||||
251 | Computer Sciences Corp. | 7,859 | ||||||||
853 | Convergys Corp. | 21,962 | ||||||||
504 | CoreLogic, Inc. * | 18,573 | ||||||||
939 | Corning, Inc. | 17,582 | ||||||||
689 | Cree, Inc. * | 19,035 |
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
10
Cloud Capital Strategic All Cap Fund | November 30, 2015 |
Schedule of Investments – (Unaudited) (Continued) |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Information Technology — (Continued) | |||||||||
251 | CSRA, Inc. * | $ | 7,904 | |||||||
1,948 | Cypress Semiconductor Corp. | 21,078 | ||||||||
601 | Diebold, Inc. | 20,824 | ||||||||
186 | DST Systems, Inc. | 22,803 | ||||||||
613 | eBay, Inc. * | 18,149 | ||||||||
241 | Electronic Arts, Inc. * | 16,340 | ||||||||
642 | EMC Corp. | 16,260 | ||||||||
76 | Equinix, Inc. | 22,670 | ||||||||
130 | F5 Networks, Inc. * | 13,392 | ||||||||
182 | Facebook, Inc., Class A | 19,001 | ||||||||
118 | FactSet Research Systems, Inc. | 20,021 | ||||||||
226 | Fair Isaac Corp. | 21,549 | ||||||||
1,391 | Fairchild Semiconductor International, Inc. * | 27,182 | ||||||||
231 | Fidelity National Information Services, Inc. | 14,704 | ||||||||
343 | First Solar, Inc. * | 19,369 | ||||||||
187 | Fiserv, Inc. * | 18,000 | ||||||||
564 | FLIR Systems, Inc. | 17,229 | ||||||||
218 | Gartner, Inc. * | 20,369 | ||||||||
341 | Global Payments, Inc. | 24,172 | ||||||||
441 | Harris Corp. | 36,632 | ||||||||
573 | Hewlett Packard Enterprise Co. | 8,522 | ||||||||
573 | HP, Inc. | 7,191 | ||||||||
733 | Ingram Micro, Inc., Class A | 22,665 | ||||||||
1,044 | Integrated Device Technology, Inc. * | 29,269 | ||||||||
574 | Intel Corp. | 19,952 | ||||||||
396 | InterDigital, Inc. | 20,866 | ||||||||
107 | International Business Machines Corp. | 14,885 | ||||||||
1,785 | Intersil Corp., Class A | 25,843 | ||||||||
181 | Intuit, Inc. | 18,170 | ||||||||
594 | Itron, Inc. * | 21,369 | ||||||||
854 | Jabil Circuit, Inc. | 21,866 | ||||||||
277 | Jack Henry & Associates, Inc. | 22,019 | ||||||||
602 | Juniper Networks, Inc. | 18,143 | ||||||||
327 | KLA-Tencor Corp. | 21,717 | ||||||||
223 | Lam Research Corp. | 17,475 | ||||||||
637 | Lexmark International, Inc., Class A | 21,880 | ||||||||
401 | Linear Technology Corp. | 18,327 | ||||||||
691 | ManTech International Corp., Class A | 23,136 | ||||||||
173 | MasterCard, Inc., Class A | 16,908 | ||||||||
750 | Mentor Graphics Corp. | 14,041 | ||||||||
381 | Microchip Technology, Inc. | 18,372 |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Information Technology — (Continued) | |||||||||
1,038 | Micron Technology, Inc. * | $ | 16,529 | |||||||
367 | Microsoft Corp. | 19,934 | ||||||||
2,561 | Monster Worldwide, Inc. * | 16,492 | ||||||||
253 | Motorola Solutions, Inc. | 18,148 | ||||||||
653 | National Instruments Corp. | 20,515 | ||||||||
765 | NCR Corp. * | 20,750 | ||||||||
514 | NetApp, Inc. | 15,773 | ||||||||
691 | NeuStar, Inc., Class A * | 17,420 | ||||||||
402 | Nielsen Holdings PLC | 18,768 | ||||||||
725 | NVIDIA Corp. | 23,003 | ||||||||
425 | Oracle Corp. | 16,543 | ||||||||
349 | Paychex, Inc. | 18,939 | ||||||||
348 | Plantronics, Inc. | 18,394 | ||||||||
1,773 | Polycom, Inc. * | 24,166 | ||||||||
543 | PTC, Inc. * | 19,566 | ||||||||
373 | Qorvo, Inc. * | 21,670 | ||||||||
274 | QUALCOMM, Inc. | 13,362 | ||||||||
620 | Rackspace Hosting, Inc. * | 17,747 | ||||||||
219 | Red Hat, Inc. * | 17,832 | ||||||||
1,852 | Rovi Corp. * | 21,871 | ||||||||
228 | Salesforce.com, Inc. * | 18,201 | ||||||||
314 | SanDisk Corp. | 23,188 | ||||||||
323 | Seagate Technology PLC | 11,607 | ||||||||
1,132 | Semtech Corp. * | 22,746 | ||||||||
443 | Silicon Laboratories, Inc. * | 23,994 | ||||||||
223 | Skyworks Solutions, Inc. | 18,496 | ||||||||
479 | SolarWinds, Inc. | 27,973 | ||||||||
437 | Solera Holdings, Inc. | 23,473 | ||||||||
1,665 | SunEdison, Inc. * | 5,313 | ||||||||
768 | Symantec Corp. | 15,041 | ||||||||
398 | Synopsys, Inc. * | 19,912 | ||||||||
270 | TE Connectivity Ltd. | 18,107 | ||||||||
294 | Tech Data Corp. * | 19,884 | ||||||||
520 | Teradata Corp. * | 15,556 | ||||||||
334 | Texas Instruments, Inc. | 19,404 | ||||||||
349 | Total System Services, Inc. | 19,503 | ||||||||
989 | Trimble Navigation Ltd. * | 22,638 | ||||||||
616 | VeriFone Systems, Inc. * | 17,655 | ||||||||
231 | VeriSign, Inc. * | 20,625 | ||||||||
220 | Visa, Inc., Class A | 17,351 | ||||||||
1,894 | Vishay Intertechnology, Inc. | 22,577 | ||||||||
196 | Western Digital Corp. | 12,229 | ||||||||
858 | Western Union Co./The | 16,184 | ||||||||
208 | WEX, Inc. * | 19,588 | ||||||||
1,508 | Xerox Corp. | 15,912 | ||||||||
385 | Xilinx, Inc. | 19,154 | ||||||||
1,483 | Yahoo!, Inc. * | 50,143 | ||||||||
206 | Zebra Technologies Corp., Class A * | 16,528 | ||||||||
2,397,104 |
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
11
Cloud Capital Strategic All Cap Fund | November 30, 2015 |
Schedule of Investments – (Unaudited) (Continued) |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Materials — 9.1% | |||||||||
291 | Air Products & Chemicals, Inc. | $ | 39,772 | |||||||
405 | Airgas, Inc. | 55,962 | ||||||||
920 | Albemarle Corp. | 49,271 | ||||||||
4,635 | Alcoa, Inc. | 43,387 | ||||||||
2,213 | Allegheny Technologies, Inc. | 28,035 | ||||||||
613 | AptarGroup, Inc. | 45,657 | ||||||||
397 | Ashland, Inc. | 44,756 | ||||||||
595 | Ball Corp. | 41,314 | ||||||||
908 | Bemis Co., Inc. | 42,786 | ||||||||
1,222 | Cabot Corp. | 53,221 | ||||||||
1,101 | Carpenter Technology Corp. | 39,580 | ||||||||
670 | CF Industries Holdings, Inc. | 30,894 | ||||||||
11,797 | Cliffs Natural Resources, Inc. | 26,425 | ||||||||
2,805 | Commercial Metals Co. | 41,493 | ||||||||
503 | Compass Minerals International, Inc. | 42,352 | ||||||||
565 | Cytec Industries, Inc. | 42,269 | ||||||||
1,095 | Domtar Corp. | 45,005 | ||||||||
943 | Dow Chemical Co./The | 49,154 | ||||||||
531 | Eagle Materials, Inc. | 36,696 | ||||||||
551 | Eastman Chemical Co. | 39,995 | ||||||||
361 | Ecolab, Inc. | 42,991 | ||||||||
773 | EI du Pont de Nemours & Co. | 52,066 | ||||||||
887 | FMC Corp. | 38,127 | ||||||||
4,256 | Freeport-McMoRan, Inc., Class B | 34,810 | ||||||||
1,383 | Greif, Inc., Class A | 49,062 | ||||||||
357 | International Flavors & Fragrances, Inc. | 42,843 | ||||||||
919 | International Paper Co. | 38,436 | ||||||||
5,378 | Intrepid Potash, Inc. * | 19,307 | ||||||||
2,571 | Louisiana-Pacific Corp. * | 47,310 | ||||||||
492 | LyondellBasell Industries NV, Class A | 47,131 | ||||||||
256 | Martin Marietta Materials, Inc. | 40,332 | ||||||||
828 | Minerals Technologies, Inc. | 50,955 | ||||||||
409 | Monsanto Co. | 38,940 | ||||||||
1,000 | Mosaic Co./The | 31,633 | ||||||||
108 | NewMarket Corp. | 44,787 | ||||||||
2,185 | Newmont Mining Corp. | 40,226 | ||||||||
924 | Nucor Corp. | 38,307 | ||||||||
2,066 | Olin Corp. | 44,969 | ||||||||
1,926 | Owens-Illinois, Inc. * | 37,149 | ||||||||
611 | Packaging Corp. of America | 41,527 | ||||||||
414 | PPG Industries, Inc. | 43,778 | ||||||||
367 | Praxair, Inc. | 41,415 | ||||||||
735 | Reliance Steel & Aluminum Co. | 43,212 |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Materials — (Continued) | |||||||||
769 | Royal Gold, Inc. | $ | 27,636 | |||||||
947 | RPM International, Inc. | 44,508 | ||||||||
662 | Scotts Miracle-Gro Co./The, Class A | 46,224 | ||||||||
754 | Sealed Air Corp. | 34,206 | ||||||||
635 | Sensient Technologies Corp. | 42,430 | ||||||||
150 | Sherwin-Williams Co./The | 41,454 | ||||||||
788 | Silgan Holdings, Inc. | 42,832 | ||||||||
1,050 | Sonoco Products Co. | 45,999 | ||||||||
2,213 | Steel Dynamics, Inc. | 38,485 | ||||||||
2,471 | United States Steel Corp. | 19,938 | ||||||||
531 | Valspar Corp./The | 44,873 | ||||||||
432 | Vulcan Materials Co. | 44,377 | ||||||||
2,260,299 | ||||||||||
| Real Estate Investment Trusts — 2.3% | |||||||||
91 | Alexandria Real Estate Equities, Inc. | 8,366 | ||||||||
229 | American Campus Communities, Inc. | 9,262 | ||||||||
154 | American Tower Corp., Class A | 15,284 | ||||||||
388 | Apartment Investment & Management Co., Class A | 14,777 | ||||||||
85 | AvalonBay Communities, Inc. | 15,410 | ||||||||
413 | BioMed Realty Trust, Inc. | 9,688 | ||||||||
125 | Boston Properties, Inc. | 15,676 | ||||||||
111 | Camden Property Trust | 8,484 | ||||||||
372 | Corporate Office Properties Trust | 8,302 | ||||||||
557 | Corrections Corp. of America | 14,371 | ||||||||
435 | Duke Realty Corp. | 8,854 | ||||||||
335 | Equity One, Inc. | 9,130 | ||||||||
199 | Equity Residential | 15,922 | ||||||||
74 | Essex Property Trust, Inc. | 17,028 | ||||||||
109 | Extra Space Storage, Inc. | 9,154 | ||||||||
62 | Federal Realty Investment Trust | 9,116 | ||||||||
70 | Four Corners Property Trust, Inc. * | 1,377 | ||||||||
564 | General Growth Properties, Inc. | 14,377 | ||||||||
379 | HCP, Inc. | 13,478 | ||||||||
206 | Highwoods Properties, Inc. | 8,972 | ||||||||
316 | Hospitality Properties Trust | 8,771 | ||||||||
814 | Host Hotels & Resorts, Inc. | 13,511 | ||||||||
634 | Iron Mountain, Inc. | 17,605 |
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
12
Cloud Capital Strategic All Cap Fund | November 30, 2015 |
Schedule of Investments – (Unaudited) (Continued) |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Real Estate Investment Trusts — | |||||||||
120 | Kilroy Realty Corp. | $ | 7,998 | |||||||
605 | Kimco Realty Corp. | 15,781 | ||||||||
386 | Lamar Advertising Co., Class A | 22,543 | ||||||||
253 | Liberty Property Trust | 8,593 | ||||||||
191 | Macerich Co./The | 14,947 | ||||||||
421 | Mack-Cali Realty Corp. | 9,892 | ||||||||
227 | National Retail Properties, Inc. | 8,720 | ||||||||
231 | Omega Healthcare Investors, Inc. | 7,940 | ||||||||
358 | Plum Creek Timber Co., Inc. | 18,181 | ||||||||
240 | Potlatch Corp. | 8,012 | ||||||||
370 | Prologis, Inc. | 15,838 | ||||||||
69 | Public Storage | 16,629 | ||||||||
359 | Rayonier, Inc. | 8,665 | ||||||||
172 | Realty Income Corp. | 8,537 | ||||||||
134 | Regency Centers Corp. | 9,050 | ||||||||
511 | Senior Housing Properties Trust | 7,381 | ||||||||
78 | Simon Property Group, Inc. | 14,482 | ||||||||
74 | SL Green Realty Corp. | 8,728 | ||||||||
228 | Taubman Centers, Inc. | 16,390 | ||||||||
244 | UDR, Inc. | 9,010 | ||||||||
250 | Ventas, Inc. | 13,358 | ||||||||
161 | Vornado Realty Trust | 15,558 | ||||||||
244 | Weingarten Realty Investors | 8,518 | ||||||||
215 | Welltower, Inc. | 13,613 | ||||||||
512 | Weyerhaeuser Co. | 16,467 | ||||||||
571,746 | ||||||||||
| Telecommunication Services — 0.6% | |||||||||
923 | AT&T, Inc. | 31,086 | ||||||||
605 | CenturyLink, Inc. | 16,284 | ||||||||
3,159 | Frontier Communications Corp. | 15,761 | ||||||||
199 | Level 3 Communications, Inc. * | 10,109 | ||||||||
3,268 | Sprint Corp. * | 11,929 | ||||||||
319 | Telephone & Data Systems, Inc. | 9,035 | ||||||||
395 | T-Mobile US, Inc. * | 14,016 | ||||||||
344 | Verizon Communications, Inc. | 15,643 | ||||||||
2,370 | Windstream Holdings, Inc. | 14,767 | ||||||||
138,630 |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Utilities — 9.8% | |||||||||
3,567 | AES Corp. | $ | 35,631 | |||||||
668 | AGL Resources, Inc. | 41,802 | ||||||||
1,180 | Alliant Energy Corp. | 71,030 | ||||||||
995 | Ameren Corp. | 43,546 | ||||||||
740 | American Electric Power Co., Inc. | 41,446 | ||||||||
2,719 | Aqua America, Inc. | 79,809 | ||||||||
1,240 | Atmos Energy Corp. | 77,260 | ||||||||
1,693 | Black Hills Corp. | 72,669 | ||||||||
2,190 | CenterPoint Energy, Inc. | 37,127 | ||||||||
1,302 | Cleco Corp. | 65,257 | ||||||||
1,194 | CMS Energy Corp. | 41,805 | ||||||||
642 | Consolidated Edison, Inc. | 39,877 | ||||||||
560 | Dominion Resources, Inc., Class A | 37,735 | ||||||||
511 | DTE Energy Co. | 41,113 | ||||||||
561 | Duke Energy Corp. | 38,046 | ||||||||
679 | Edison International | 40,288 | ||||||||
614 | Entergy Corp. | 40,915 | ||||||||
831 | Eversource Energy | 42,327 | ||||||||
1,238 | Exelon Corp. | 33,813 | ||||||||
1,238 | FirstEnergy Corp. | 38,874 | ||||||||
2,710 | Great Plains Energy, Inc. | 73,155 | ||||||||
2,395 | Hawaiian Electric Industries, Inc. | 68,437 | ||||||||
1,131 | IDACORP, Inc. | 76,984 | ||||||||
4,052 | MDU Resources Group, Inc. | 70,579 | ||||||||
1,320 | National Fuel Gas Co. | 60,372 | ||||||||
395 | NextEra Energy, Inc. | 39,437 | ||||||||
2,442 | NiSource, Inc. | 46,864 | ||||||||
2,082 | NRG Energy, Inc. | 25,730 | ||||||||
2,403 | OGE Energy Corp. | 62,735 | ||||||||
3 | ONE Gas, Inc. | 122 | ||||||||
1,279 | ONEOK, Inc. | 37,718 | ||||||||
1,535 | Pepco Holdings, Inc. | 39,410 | ||||||||
808 | PG&E Corp. | 42,586 | ||||||||
666 | Pinnacle West Capital Corp. | 42,182 | ||||||||
2,637 | PNM Resources, Inc. | 76,485 | ||||||||
1,298 | PPL Corp. | 44,194 | ||||||||
999 | Public Service Enterprise Group, Inc. | 39,080 | ||||||||
3,645 | Questar Corp. | 69,077 | ||||||||
754 | SCANA Corp. | 44,563 | ||||||||
413 | Sempra Energy | 41,001 | ||||||||
940 | Southern Co./The | 41,878 | ||||||||
1,953 | TECO Energy, Inc. | 51,401 | ||||||||
2,025 | UGI Corp. | 70,202 | ||||||||
1,692 | Vectren Corp. | 72,043 | ||||||||
832 | WEC Energy Group, Inc. | 41,051 | ||||||||
1,858 | Westar Energy, Inc. | 79,291 |
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
13
Cloud Capital Strategic All Cap Fund | November 30, 2015 |
Schedule of Investments – (Unaudited) (Continued) |
Shares | Fair Value | |||||||||
| Common Stocks — (Continued) | |||||||||
| Utilities — (Continued) | |||||||||
1,219 | WGL Holdings, Inc. | $ | 75,181 | |||||||
1,165 | Xcel Energy, Inc. | 41,547 | ||||||||
2,433,675 | ||||||||||
| Total Common Stocks | 22,014,044 | ||||||||
| Exchange-Traded Funds — 4.9% | |||||||||
10,200 | iShares Russell 2000 ETF | 1,214,718 | ||||||||
| Total Exchange-Traded Funds | 1,214,718 | ||||||||
| Cash Equivalents — 6.5% | |||||||||
175,422 | FOLIOfn Investment Cash Account, 0.01% (b) | 175,422 | ||||||||
1,440,284 | FOLIOfn Investment Sweep Account, 0.01% (b) | 1,440,284 | ||||||||
| Total Cash Equivalents | 1,615,706 | ||||||||
| Total Investments | 24,844,468 | ||||||||
| Other Assets in Excess of | 12,978 | ||||||||
| Net Assets — 100.0% | $ | 24,857,446 |
(a) | Business Development Company. |
(b) | Rate disclosed is the seven day yield as of November 30, 2015. |
* | Non-income producing security. |
The sectors shown on the schedule of investments are based on Global Industry Classification Standard, or GICS® (“GICS”). The GICS was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC (“S&P”). GICS is a service mark of MSCI, Inc. and S&P and has been licensed for use by Huntington Asset Services, Inc.
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
14
Statement of Assets and Liabilities – (Unaudited)
November 30, 2015
Assets: | ||||
Investments in securities | ||||
At cost | $ | 23,805,293 | ||
At fair value | $ | 24,844,468 | ||
Cash | 3,217 | |||
Receivable for fund shares sold | 21,448 | |||
Interest and dividends receivable | 40,694 | |||
Tax reclaims receivable | 46 | |||
Prepaid expenses | 19,237 | |||
Total assets | 24,929,110 | |||
Liabilities: | ||||
Payable to Adviser | 1,088 | |||
Payable for investments purchased | 1,971 | |||
Payable for fund shares redeemed | 17,002 | |||
Payable to administrator, fund accountant and transfer agent | 17,722 | |||
Administrative servicing fees - Institutional Class | 6,048 | |||
Other accrued expenses | 27,833 | |||
Total Liabilities | 71,664 | |||
Net Assets | $ | 24,857,446 | ||
Net Assets consist of: | ||||
Paid in capital | $ | 23,077,511 | ||
Accumulated net investment income | 45,078 | |||
Accumulated net realized gain from investment transactions | 695,682 | |||
Net unrealized appreciation on investments | 1,039,175 | |||
Net Assets | $ | 24,857,446 | ||
Institutional Class: | ||||
Shares Outstanding (unlimited number of shares authorized, no par value) | 2,964,533 | |||
Net Asset Value, Offering and Redemption Price Per Share: | $ | 8.38 | ||
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
15
Statement of Operations – (Unaudited)
For the Six Months Ended November 30, 2015
Investment Income | ||||
Dividend income (net of foreign taxes withheld of $148) | $ | 211,592 | ||
Interest income | 91 | |||
Total investment income | 211,683 | |||
Expenses | ||||
Investment Adviser | 60,545 | |||
Administrative servicing - Institutional Class | 22,174 | |||
Administration | 20,251 | |||
Fund accounting | 12,500 | |||
Transfer agent | 19,011 | |||
Custodian | 6,720 | |||
Legal | 8,336 | |||
Trustee | 2,471 | |||
Pricing | 11,722 | |||
Registration | 14,762 | |||
Audit | 21,039 | |||
Report printing | 10,034 | |||
Miscellaneous | 8,063 | |||
Line of credit | 4,798 | |||
Total Expenses | 222,426 | |||
Recoupment of prior expenses waived/reimbursed by Adviser | 11,959 | |||
Fees contractually waived by Adviser | (60,545 | ) | ||
Net operating expenses | 173,840 | |||
Net investment income | 37,843 | |||
Net Realized and Unrealized Gain/(Loss) on Investments | ||||
Net realized gain on investment securities transactions | 882,076 | |||
Net change in unrealized depreciation of investment securities | (1,792,533 | ) | ||
Net realized and unrealized loss on investments | (910,457 | ) | ||
Net decrease in net assets resulting from operations | $ | (872,614 | ) | |
See accompanying notes which are an integral part of these financial statements.
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Statements of Changes in Net Assets
For the Six Months Ended | For The Year | |||||||
Increase (Decrease) in Net Assets due to: | (Unaudited | ) | ||||||
Operations: | ||||||||
Net investment income | $ | 37,843 | $ | 113,402 | ||||
Net realized gain on investment transactions | 882,076 | 2,550,662 | ||||||
Net change in unrealized depreciation of investments | (1,792,533 | ) | (953,519 | ) | ||||
Net increase (decrease) in net assets resulting from operations | (872,614 | ) | 1,710,545 | |||||
Distributions: | ||||||||
From net investment income: | — | (193,052 | ) | |||||
From net realized gain: | — | (9,091,051 | ) | |||||
Total distributions | — | (9,284,103 | ) | |||||
Capital Transactions: | ||||||||
Proceeds from shares sold | 2,941,997 | 11,015,838 | ||||||
Shares issued in connection with merger (a) | — | 10,333,009 | ||||||
Reinvestment of distributions | — | 6,464,866 | ||||||
Amount paid for shares redeemed | (2,610,285 | ) | (19,229,951 | ) | ||||
Net change resulting from capital transactions | 331,712 | 8,583,762 | ||||||
Total Increase (Decrease) in Net Assets | (540,902 | ) | 1,010,204 | |||||
Net Assets: | ||||||||
Beginning of period | 25,398,348 | 24,388,144 | ||||||
End of period | $ | 24,857,446 | $ | 25,398,348 | ||||
Accumulated net investment income included in net assets at end of period | $ | 45,078 | $ | 7,235 | ||||
Share Transactions: | ||||||||
Shares sold | 354,314 | 935,892 | ||||||
Shares issued in connection with merger (a) | — | 1,239,011 | ||||||
Shares issued in reinvestment of distributions | — | 789,361 | ||||||
Shares redeemed | (312,229 | ) | (1,356,593 | ) | ||||
Total | 42,085 | 1,607,671 |
(a) | See Note 1 to the Notes to Financial Statements. |
See accompanying notes which are an integral part of these financial statements.
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Financial Highlights |
(For a share outstanding during each period)
For the six months ended November 30, 2015 | For the year ended May 31, 2015 | For the year ended May 31, 2014 | For the year ended May 31, 2013 | For the period ended May 31, 2012 (a) | ||||||||||||||||
Institutional Class: | (Unaudited | ) | ||||||||||||||||||
Selected Per Share Data: | ||||||||||||||||||||
Net asset value, beginning of period | $ 8.69 | $ | 18.55 | $ | 17.00 | $ | 14.46 | $ | 15.00 | |||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income | 0.01 | 0.06 | (b) | 0.13 | 0.13 | 0.07 | ||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.32 | ) | 0.77 | 3.22 | 3.54 | (0.54 | ) | |||||||||||||
Total from investment operations | (0.31 | ) | 0.83 | 3.35 | 3.67 | (0.47 | ) | |||||||||||||
Less distributions to shareholders: | ||||||||||||||||||||
From net investment income | — | (0.22 | ) | (0.08 | ) | (0.14 | ) | (0.04 | ) | |||||||||||
From net realized gains | — | (10.47 | ) | (1.72 | ) | (0.99 | ) | (0.03 | ) | |||||||||||
Total distributions | — | (10.69 | ) | (1.80 | ) | (1.13 | ) | (0.07 | ) | |||||||||||
Net asset value, end of period | $ 8.38 | $ | 8.69 | $ | 18.55 | $ | 17.00 | $ | 14.46 | |||||||||||
Total Return(c) | (3.57 | )%(d) | 7.99 | % | 20.81 | % | 26.51 | % | (3.12 | )%(d) | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000) | $24,857 | $ | 25,398 | $ | 24,388 | $ | 46,746 | $ | 38,550 | |||||||||||
Ratio of expenses to average net assets | 1.44 | %(e)(f)(g) | 1.26 | %(h) | 1.23 | % | 1.40 | % | 1.40 | %(g) | ||||||||||
Ratio of expenses to average net assets before waiver and recoupment | 1.84 | %(g) | 1.74 | % | 1.15 | % | 1.27 | % | 1.90 | %(g) | ||||||||||
Ratio of net investment income to average net assets | 0.31 | %(g) | 0.51 | % | 0.57 | % | 0.78 | % | 0.53 | %(g) | ||||||||||
Ratio of net investment income to average net assets before waiver and recoupment | (0.09 | )%(g) | 0.03 | % | 0.65 | % | 0.91 | % | 0.03 | %(g) | ||||||||||
Portfolio turnover rate | 66.79 | %(d) | 61.71 | % | 90.14 | % | 72.66 | % | 163.38 | %(d) |
(a) | For the period June 29, 2011 (commencement of operations) to May 31, 2012. |
(b) | Net investment income per share is based on average shares outstanding during the year. |
(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) | Includes recoupment of previously waived fees of 0.10%. |
(f) | Includes 0.04% for line of credit fees. |
(g) | Annualized |
(h) | Includes recoupment of previously waived fees of 0.04%. |
See accompanying notes which are an integral part of these financial statements.
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Notes to the Financial Statements (Unaudited)
November 30, 2015
Note 1. Organization
The Cloud Capital Strategic All Cap Fund (the “Fund”) was 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 Fund is one of a series of funds authorized by the Board of Trustees (the “Board”). The Fund only offers Institutional Class Shares. The Fund’s Institutional Class Shares commenced operations on June 29, 2011. The Fund’s investment adviser is Cloud Capital LLC (the “Adviser”). The investment objective of the Fund is long-term capital appreciation.
As of the close of business on January 16, 2015, the Fund acquired all the assets and assumed all of the liabilities of the Cloud Capital Strategic Mid Cap Fund (the “Mid Cap Fund”) pursuant to an agreement and plan of reorganization approved by the Board on November 19, 2014. The reorganization qualified as a tax-free reorganization for federal income tax purposes with no gain or loss recognized to the funds or their shareholders.
The acquisition was accomplished by a tax-free exchange of 899,233 Institutional Class shares of the Mid Cap Fund (valued at $10,333,009) for 1,239,011 Institutional Class shares of the Fund outstanding on January 16, 2015. For financial reporting purposes, assets received and shares issued by the Fund were recorded at fair value; however, the identified cost of the investments received from the Mid Cap Fund was carried forward to align ongoing reporting of the Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes. The aggregate net assets of the Fund immediately before the acquisition were $13,682,729. The aggregate net assets of the Mid Cap Fund at January 16, 2015 of $10,333,009, including $555,302 of unrealized appreciation, were combined with those of the Fund, resulting in combined aggregate net assets of $24,015,738.
Assuming the acquisition had been completed on June 1, 2014, the beginning of the annual reporting period of the Fund, the Fund’s pro forma results of operation for the year ended May 31, 2015, are as follows:
Net investment income | $ | 85,147 | ||
Net realized and unrealized gains on investment | 2,558,259 | |||
Net increase in net assets resulting from operations | $ | 2,643,406 |
Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the Mid Cap Fund that have been included in the Fund’s statement of operations since January 16, 2015.
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Notes to the Financial Statements (Unaudited) (continued)
The 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 Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services-Investment Companies”. 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 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.
For the six months ended November 30, 2015, 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 six months ended November 30, 2015, the Fund did not incur any interest or penalties. The Fund is subject to examination by U.S. federal tax authorities for the last three tax year ends and the interim tax period since then.
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.
Security Transactions and Related Income—The Fund follows industry practice and records security transactions on the trade date for financial reporting purposes. The specific identification method is used for determining gains or losses for financial statement 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 Fund’s understanding of the applicable country’s tax rules and rates. 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.
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Dividends and Distributions—The Fund intends to distribute substantially all of its net investment income, if any, as dividends to its shareholders on at least an annual basis. The Fund intends to distribute its net realized long-term and 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 among 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 Fund.
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. 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 the Fund’s investments. These inputs are summarized in the three broad levels listed below.
• | Level 1—unadjusted quoted prices in active markets for identical investments and/or registered investment companies where the value per share is determined and published and is the basis for current transactions for identical assets or liabilities at the valuation date. |
• | 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) |
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Notes to the Financial Statements (Unaudited) (continued)
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, exchanged-traded funds and real estate investment trusts, are generally valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices 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 Adviser 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 Adviser, in conformity with guidelines adopted by and subject to review by the Board. These securities will generally be categorized as Level 3 securities.
In accordance with the Trust’s good faith pricing guidelines, the Adviser, 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 Adviser 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 Adviser’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 Adviser 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.
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The following is a summary of the inputs used to value the Fund’s investments as of November 30, 2015:
Valuation Inputs | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Common Stocks* | $ | 22,014,044 | $ | — | $ | — | $ | 22,014,044 | ||||||||
Exchange-Trade Funds | 1,214,718 | — | — | 1,214,718 | ||||||||||||
Cash Equivalents | 1,615,706 | — | — | 1,615,706 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 24,844,468 | $ | — | $ | — | $ | 24,844,468 |
* | Please refer to Schedule of Investments for industry classifications. |
The Fund did not hold any investments at any time during the reporting period in which other significant observable inputs (Level 2) were used in determining fair value. The Fund also 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 Fund 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 as of November 30, 2015 and the previous reporting period end.
Note 4. Fees and Other Transactions with Affiliates and Other Service Providers
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 management services, the 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, 2015, the Adviser earned fees of $60,545 from the Fund before the waivers and recoupment described below. At November 30, 2015, the Fund owed the Adviser $1,088.
The Adviser has contractually agreed to waive its management fee and/or reimburse certain Fund operating expenses, but only to the extent necessary so that the Fund’s net expenses, excluding brokerage fees and commissions, borrowing costs (such as interest and dividend expenses on securities sold short), taxes, distribution and service (12b-1) fees, extraordinary expenses and indirect expenses (such as fees and expenses of acquired funds) does not exceed 1.40% of the net assets of the Fund. On February 1, 2014, the Adviser contractually agreed to waive, in its entirety, its advisory fees effective February 1, 2014, through September 30, 2016. This contractual arrangement may only be terminated by mutual consent of the Adviser and the Board, and it will automatically terminate upon the termination of the investment advisory agreement between the Fund and the Adviser. The Adviser shall not be entitled to reimbursement for any advisory fees waived for the Fund for the period February 1, 2014 through September 30, 2016. Each waiver or reimbursement of an expense by the Adviser prior
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Notes to the Financial Statements (Unaudited) (continued)
to February 1, 2014, is subject to repayment by the Fund within the three fiscal years following the fiscal year in which the particular expense was incurred, provided that the Fund is able to make the repayment without exceeding the applicable expense limitation. For the six months ended November 30, 2015, expenses totaling $60,545 were waived or reimbursed by the Adviser. This amount is not subject to potential recoupment by the Adviser. At a special meeting of the shareholders held on January 19, 2015, shareholders of the Fund approved a proposal to allow the Advisor to recoup reimbursements provided to the Mid Cap Fund prior to the merger. The Adviser recouped $11,959 during the period June 1, 2015, through November 30, 2015, which had previously been waived in the Mid Cap Fund.
The amounts subject to repayment by the Fund, pursuant to the aforementioned conditions are as follows:
Amount | Recoverable through May 31, | |||
$34,434 | 2016 |
The Trust retains Ultimus Asset Services, LLC (formerly Huntington Asset Services, Inc. – see Subsequent Events) (“Ultimus”) to manage the Fund’s business affairs and provide the Fund with administrative and Chief Compliance Officer services, including all regulatory reporting and necessary office equipment and personnel. For the six months ended November 30, 2015, Ultimus earned fees of $20,251 for administrative and compliance services provided to the Fund. At November 30, 2015, Ultimus was owed $6,750 from the Fund for administrative and compliance services.
The Trust also retains Ultimus to act as the Fund’s transfer agent and to provide fund accounting services. For the six months ended November 30, 2015, Ultimus earned fees of $19,011 for transfer agent services and reimbursement for out-of-pocket expenses incurred in providing transfer agent services. At November 30, 2015, Ultimus was owed $6,805 from the Fund for transfer agent services and out-of-pocket expenses. For the six months ended November 30, 2015, Ultimus earned fees of $12,500 from the Fund for fund accounting services. At November 30, 2015, Ultimus was owed $4,167 from the Fund for fund accounting services.
Certain officers and a trustee of the Trust are members of management and/or employees of Ultimus. Ultimus is a wholly-owned subsidiary of Ultimus Fund Solutions, LLC, the parent company of Unified Financial Securities, LLC (the “Distributor”).
The Fund may pay certain financial intermediaries that provide certain administrative services to shareholders who invest in the Institutional Class shares of the Fund, including record keeping and sub-accounting shareholder accounts. The Fund is authorized to pay up to 0.25% of the average daily net assets of the 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
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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 Fund on a financial intermediary’s trading systems. For the six months ended November 30, 2015, the Fund incurred administrative servicing fees of $22,174. At November 30, 2015, the Fund owed $6,048 in administrative servicing fees.
The Distributor acts as the principal distributor of the Fund’s shares. A trustee and 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. Purchases and Sales of Securities
For the six months ended November 30, 2015, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations, were as follows:
Purchases | Sales | |||
$15,074,261 | $ | 15,006,381 |
There were no purchases or sales of long-term U.S. Government obligations during the six months ended November 30, 2015.
Note 6. Line of Credit
On December 3, 2015, the Trust, on behalf of the Fund, renewed its short-term credit agreement (“Line of Credit”) with Huntington National Bank (“Huntington”), formerly an affiliate of Huntington Asset Services, Inc., expiring on December 3, 2016. Under the terms of the agreement, the Funds may borrow up to $3 million at an interest rate of LIBOR plus 150 basis points. Any borrowings under the Line of Credit are collateralized by securities in the Fund’s portfolio. The purpose of the agreement is to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. Huntington receives an annual facility fee of 0.125% on $3 million as well as an additional annual fee of 0.125% on any unused portion of the credit facility, invoiced quarterly, for providing the Line of Credit. The Fund will not borrow money, except (a) from a bank, provided that immediately after such borrowing there is an asset coverage of 300% for all borrowings of a Fund; or (b) from a bank or other persons for temporary purposes only, provided that such temporary borrowings are in an amount not exceeding 10% of a Fund’s total assets at the time when the borrowing is made. This limitation does not preclude a Fund from entering into reverse repurchase transactions, provided that the Fund has asset coverage of 300% for all borrowings and repurchase commitments of the Fund pursuant to reverse repurchase transactions. For the six months ended November 30. 2015, the Fund had no borrowings under this Line of Credit.
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Notes to the Financial Statements (Unaudited) (continued)
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. 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, 2015, TD Ameritrade Trust Company (“TD Ameritrade”) owned, as record shareholder 73% of the outstanding shares of the Fund. It is not known whether TD Ameritrade or any of the underlying beneficial owners owned or controlled 25% or more of the voting securities of the Fund.
Note 9. Federal Tax Information
At November 30, 2015, the net unrealized appreciation (depreciation) of investments for tax purposes was as follows:
Tax Cost of Securities | Unrealized Appreciation | Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | |||
$24,404,166 | $1,495,688 | $(1,055,386) | $440,302 |
The difference between book basis and tax basis unrealized appreciation was attributable primarily to the tax deferral of losses on wash sales.
The tax characterization of distributions paid for the fiscal year ended May 31, 2015 was as follows:
Ordinary Income* | Long-Term Capital Gain | Total Distributions | ||
$1,065,158 | $8,218,945 | $9,284,103 |
* | Short-term capital gains distributions are treated as ordinary income for tax purposes. |
At May 31, 2015, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Undistributed Ordinary Income | Undistributed Long-Term Capital Gains | Accumulated Capital and Other Losses | Unrealized Appreciation (Depreciation) | Total Accumulated Earnings (Loss) | ||||
$189,617 | $241,831 | $(11,734) | $2,232,835 | $2,652,549 |
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Note 10. Commitments and Contingencies
The Fund indemnifies its officers and trustees for certain liabilities that may arise from performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of 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 11. Subsequent Events
Management of the Fund has evaluated the need for disclosure and/or adjustments resulting from subsequent events through the date these financials were issued. On November 13, 2015, Huntington Bancshares, Inc. entered into an agreement to sell Huntington Asset Services, Inc. and Unified Financial Services, Inc. to Ultimus Fund Solutions, LLC. The sale closed on December 31, 2015. Management has determined that there were no additional items requiring additional disclosure.
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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 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.
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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) 670-2227 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
Bryan W. Ashmus, Principal Financial Officer and Treasurer
John C. Swhear, Chief Compliance Officer, AML Officer and Vice-President
Carol J. Highsmith, Vice President and Secretary
Matthew J. Miller, Vice President
INVESTMENT ADVISER
Cloud Capital LLC
P.O. Box 451179
Grove, OK 74345
DISTRIBUTOR
Unified Financial Securities, LLC
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
Ultimus Asset Services, LLC
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, LLC
Member FINRA/SIPC
To Shareholders of the LS Opportunity Fund,
Prospector Partners, LLC (“Prospector”), which is based in Guilford, CT is the sub-adviser of the LS Opportunity Fund (“LSOFX” or the “Fund”). Prospector has an 18-year long/short equity hedge fund track record with a substantially similar investment objective to LSOFX and brings its experience to our fund in a daily liquid mutual fund format.
The Fund aims to identify compelling long and short investment opportunities through a bottom-up stock selection process based on in-depth analysis of business and financial fundamentals. Through extensive research, implementation of risk management, and no use of leverage in the long book, the Fund strives to do what a successful investment manager should do – preserve capital while delivering above-market returns and managing volatility. For additional information, please visit our website at www.longshortadvisors.com.
Market Review
The six month fiscal period ended November 30, 2015 (the “Period”) was a volatile one. It included an August 2015 drawdown in equity markets of a magnitude not experienced in at least three years. Concerns about economic weakness in China, a global selloff in commodity prices and uncertainty over U.S. Federal Reserve Policy on the direction of interest rates, all helped to stoke the large price swings.
The world over, central bank quantitative easing strategies have endeavored to pin interest rates near record low levels and encourage investors to buy risk assets. These conditions encouraged the doubling of stock prices over the past five years while earnings have grown by less than half that amount. Digging a bit deeper into domestic markets, it is noteworthy that even during the recent sell-off, the long period of “growth” stocks’ outperformance versus “value” has continued.
We believe that investors have increasingly placed a greater premium on companies and industries which are showing unit growth during the tepid economic recovery of the last 8 years. Consequently, since mid-2007, the Russell 1000 Growth Index has outperformed its “Value” counterpart by an astonishing amount. While, to an extent, this makes sense (after all, as interest rates decline, discounted future cash flows should, in theory, be worth more—and growth companies are most levered to this equation), this leverage works both ways. As the economy continues to strengthen, and interest rates eventually increase, we think it quite possible that this trend reverses. Much as was the case during the “tech bubble” of the late-90’s, we are unwilling to proclaim “value investing” dead.
Fund performance was helped by merger and acquisition activity among our financial stocks which are patiently positioned to benefit from higher future interest rates. We feel strongly that reported ROE’s in your banking, brokerage, and
1
insurance investments have been muted by today’s prevailing low interest rates as a direct result of coordinated global easing policies of central banks. We also believe that these policies will run their course over the intermediate term and that the yield curve will normalize at higher rate levels. Once that happens, the affected ROE’s will rise and financial stock valuations could expand.
LSOFX finished the Period with a cumulative total return of +0.89%, while the S&P 500® Index (“S&P 500”) lost -0.21% and the HFRX Equity Hedge Index (“HFRX”) of long/short equity hedge funds lost -4.34%.
Management’s Discussion of Fund Performance
The Fund had several investment factors that unfolded over the course of the Period, including insurance M&A activity which drove positive results for two key holdings: Chubb and StanCorp. In addition, strong consumer spending helped our consumer names while the Fund managed to avoid sectors such as materials, energy, and healthcare by being underexposed to the sectors.
Contributors
The top three contributors to performance during the Period were in the financial sector and on the long side of the portfolio. Chubb (CB), StanCorp (SFG) and Arch Capital (ACGL) combined to add more than 150 basis points to the total return during the Period. Both Chubb and StanCorp were acquisitions during the Period, and Chubb remains amongst the top ten positions at the end of the Period.
Detractors
The top three stocks which detracted from performance during the Period were long positions in Newmont Mining (NEM), Leucadia National (LUK), and Murphy
2
Oil (MUR). These three stocks combined to hurt the Period’s performance by fewer than 90 basis points, and each long position continues to be held in the Fund at the end of the Period.
Management Outlook
We continue to take a long-term value approach to investing and the protection of capital remains a key priority. We expect the long book to continue to hold securities with long themes including companies with undervalued assets and strong cash flows that are also attractive M&A candidates, companies levered to interest rate increases, companies potentially benefiting from corporate tax reform and repatriation of foreign cash balances, and companies positioned to benefit from a stronger U.S. consumer.
At Period’s end, the Fund’s top 10 long positions represented approximately 27% of the long book and included Automatic Data (ADP), Berkshire Hathaway (BRK.B), Chubb (CB), Eaton (ETN), Home Depot (HD), McDonalds (MCD), Microsoft (MSFT), Procter and Gamble (PG), T Rowe Price (TROW), and White Mountains Insurance (WTM).
The Fund’s short book is populated with 24 individual companies that we believe have excessive valuations relative to takeout values, aggressive accounting practices, business model challenges, and/or stale brands losing market share.
We appreciate the confidence that you place in us and look forward to reporting to you again following our fiscal year end of May 31, 2016.
Sincerely,
Long Short Advisors
3
“The Secret of Wealth Creation is to Avoid Large Losses”
-John Gillespie, portfolio manager
Thank you for choosing the LS Opportunity Fund as a place to invest your assets alongside ours. 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 877-336-6763, 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 adviser and sub-adviser 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 adviser nor the sub-adviser 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 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. 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. HFRX 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. For inclusion in the HFRX indices a hedge fund must meet the HFRI criteria, but also be open to new transparent investment, have at least $50 million assets under
4
management and have at least a 24 month track record. 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.
5
Investment Results – (Unaudited)
Total Returns* |
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(For the periods ended November 30, 2015) |
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Average Annual Returns | ||||||||||||||||||||
Six Months | One Year | Three Year | Five Year | Since Inception (September 30, 2010) | ||||||||||||||||
LS Opportunity Fund | 0.89 | % | (2.00 | )% | 7.04 | % | 5.22 | % | 5.86 | % | ||||||||||
S&P 500® Index** | (0.21 | )% | 2.75 | % | 16.09 | % | 14.40 | % | 14.65 | % |
Total annual operating expenses, as disclosed in the Fund’s prospectus dated September 25, 2015, were 2.96% of average daily net assets (2.51% after fee waivers and expense reimbursements by the Adviser.) Long Short Advisors, LLC (the “Adviser”) has entered into an amended expense limitation agreement, pursuant to which it will waive its fees and/or reimburse other expenses of the Fund until September 30, 2016, so that Total Annual Fund 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. Each waiver or reimbursement of an expense by the Adviser is subject to repayment by the Fund within the three fiscal years following the fiscal year in which the expense was incurred, provided that the Fund is able to make the repayment without exceeding the expense limitation in place at the time of the waiver or reimbursement. This agreement may only be terminated by mutual consent of the Adviser and the Board of Trustees.
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. For periods prior to April 28, 2015, the Fund had a different sub-adviser than the current sub-adviser. Returns of the Fund prior to April 28, 2015, were achieved by the previous sub-adviser.
** 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.
6
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, LLC, Member FINRA.
Fund Holdings – (Unaudited)
Sector Exposure (11/30/2015)
(Based on Net Assets)
Long | Short | Gross | Net | |||||||||||||
Consumer Discretionary | 8.52 | % | -0.64 | % | 9.16 | % | 7.88 | % | ||||||||
Consumer Staples | 9.40 | % | -2.09 | % | 11.49 | % | 7.31 | % | ||||||||
Energy | 3.28 | % | -0.94 | % | 4.22 | % | 2.34 | % | ||||||||
Financials | 44.89 | % | -22.46 | % | 67.35 | % | 22.43 | % | ||||||||
Health Care | 7.66 | % | 0.00 | % | 7.66 | % | 7.66 | % | ||||||||
Industrials | 5.78 | % | 0.00 | % | 5.78 | % | 5.78 | % | ||||||||
Information Technology | 12.27 | % | -0.50 | % | 12.77 | % | 11.77 | % | ||||||||
Materials | 0.91 | % | 0.00 | % | 0.91 | % | 0.91 | % | ||||||||
Real Estate Investment Trusts | 1.45 | % | 0.00 | % | 1.45 | % | 1.45 | % | ||||||||
Unclassified | 0.06 | % | 0.00 | % | 0.06 | % | 0.06 | % | ||||||||
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Total | 94.22 | % | -26.63 | % | 120.85 | % | 67.59 | % | ||||||||
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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.
7
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, 2015 to November 30, 2015.
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 the Period Ended November 30, 2015” 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 June 1, 2015 | Ending Account Value November 30, 2015 | Expenses Paid During the Period Ended November 30, 2015* | |||||||||
Actual | $ | 1,000.00 | $ | 1,008.90 | $ | 14.80 | ||||||
Hypothetical ** | $ | 1,000.00 | $ | 1,010.27 | $ | 14.81 |
* | Expenses are equal to the Fund’s annualized expense ratio of 2.95%, multiplied by the average account value over the period, multiplied by 183/366 . |
** | Assumes a 5% return before expenses. |
8
LS Opportunity Fund
Schedule of Investments
November 30, 2015 (Unaudited)
Common Stocks – Long – Domestic – 84.89% | Shares | Fair Value | ||||||
Consumer Discretionary – 8.52% | ||||||||
Darden Restaurants, Inc.(a) | 4,900 | $ | 275,233 | |||||
Home Depot, Inc./The(a) | 5,700 | 763,116 | ||||||
McDonald’s Corp.(a) | 10,100 | 1,153,016 | ||||||
Yum! Brands, Inc.(a) | 8,500 | 616,335 | ||||||
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2,807,700 | ||||||||
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Consumer Staples – 8.22% | ||||||||
Church & Dwight Co., Inc.(a) | 4,600 | 394,542 | ||||||
Coca-Cola Co./The(a) | 8,200 | 349,484 | ||||||
Colgate-Palmolive Co.(a) | 6,800 | 446,624 | ||||||
Mondelez International, Inc. – Class A(a) | 8,700 | 379,842 | ||||||
PepsiCo, Inc.(a) | 3,100 | 310,496 | ||||||
Procter & Gamble Co./The(a) | 8,700 | 651,108 | ||||||
Wal-Mart Stores, Inc.(a) | 3,000 | 176,520 | ||||||
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2,708,616 | ||||||||
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Energy – 3.28% | ||||||||
ConocoPhillips(a) | 4,100 | 221,605 | ||||||
Hess Corp.(a) | 10,500 | 619,500 | ||||||
Murphy Oil Corp.(a) | 8,400 | 240,072 | ||||||
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1,081,177 | ||||||||
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Financials – 38.07% | ||||||||
Aflac, Inc.(a) | 4,900 | 319,676 | ||||||
Beneficial Bancorp, Inc.(a)* | 25,100 | 350,396 | ||||||
Berkshire Hathaway, Inc. – Class B(a)* | 10,400 | 1,394,536 | ||||||
Central Pacific Financial Corp.(a) | 13,700 | 318,388 | ||||||
Chubb Corp./The(a) | 7,200 | 939,816 | ||||||
Citigroup, Inc.(a) | 8,200 | 443,538 | ||||||
Federated Investors, Inc. – Class B | 12,700 | 397,764 | ||||||
Franklin Resources, Inc.(a) | 13,200 | 553,344 | ||||||
JPMorgan Chase & Co.(a) | 3,000 | 200,040 | ||||||
Legg Mason, Inc.(a) | 10,800 | 479,304 | ||||||
Leucadia National Corp.(a) | 28,400 | 502,112 | ||||||
Marsh & McLennan Cos., Inc.(a) | 5,500 | 304,150 | ||||||
Oritani Financial Corp.(a) | 25,400 | 440,436 | ||||||
PayPal Holdings, Inc.(a)* | 12,700 | 447,802 | ||||||
PJT Partners, Inc. – Class A* | 21,400 | 501,616 | ||||||
PNC Financial Services Group, Inc./The(a) | 3,900 | 372,489 |
9
See accompanying notes which are an integral part of these financial statements.
LS Opportunity Fund
Schedule of Investments – continued
November 30, 2015 (Unaudited)
Common Stocks – Long – Domestic – 84.89% – continued | Shares | Fair Value | ||||||
Financials – 38.07% – continued | ||||||||
Primerica, Inc.(a) | 11,800 | $ | 604,632 | |||||
ProAssurance Corp.(a) | 9,000 | 476,190 | ||||||
Progressive Corp./The(a) | 16,300 | 502,366 | ||||||
Safety Insurance Group, Inc.(a) | 8,000 | 448,080 | ||||||
Selective Insurance Group, Inc. | 3,900 | 134,589 | ||||||
State Street Corp.(a) | 3,700 | 268,546 | ||||||
T. Rowe Price Group, Inc.(a) | 9,400 | 715,810 | ||||||
U.S. Bancorp(a) | 10,300 | 452,067 | ||||||
White Mountains Insurance Group Ltd.(a) | 1,205 | 973,640 | ||||||
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12,541,327 | ||||||||
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Health Care – 6.39% | ||||||||
Abbott Laboratories(a) | 8,200 | 368,344 | ||||||
Invacare Corp.(a) | 11,800 | 235,056 | ||||||
Johnson & Johnson(a) | 5,100 | 516,324 | ||||||
Merck & Co., Inc.(a) | 8,100 | 429,381 | ||||||
Patterson Companies, Inc.(a) | 12,200 | 555,954 | ||||||
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2,105,059 | ||||||||
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Industrials – 5.78% | ||||||||
Celadon Group, Inc. | 23,100 | 321,090 | ||||||
CIRCOR International, Inc. | 7,400 | 336,330 | ||||||
Eaton Corp. PLC(a) | 12,900 | 750,264 | ||||||
Tyco International PLC | 4,500 | 158,895 | ||||||
United Technologies Corp. | 3,500 | 336,175 | ||||||
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1,902,754 | ||||||||
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Information Technology – 12.27% | ||||||||
Automatic Data Processing, Inc.(a) | 7,500 | 646,950 | ||||||
eBay, Inc.(a)* | 6,700 | 198,253 | ||||||
FLIR Systems, Inc.(a) | 17,400 | 531,744 | ||||||
Microsoft Corp.(a) | 17,200 | 934,820 | ||||||
Paychex, Inc.(a) | 6,900 | 374,325 | ||||||
Science Applications International Corp.(a) | 11,000 | 552,640 | ||||||
VeriSign, Inc.(a)* | 4,300 | 384,592 | ||||||
Xilinx, Inc.(a) | 8,400 | 417,396 | ||||||
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4,040,720 | ||||||||
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Materials – 0.91% | ||||||||
Newmont Mining Corp.(a) | 16,200 | 298,242 | ||||||
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See accompanying notes which are an integral part of these financial statements.
LS Opportunity Fund
Schedule of Investments – continued
November 30, 2015 (Unaudited)
Common Stocks –Long –Domestic –84.89% – continued | Shares | Fair Value | ||||||
Real Estate Investment Trusts – 1.45% | ||||||||
Four Corners Property Trust, Inc.(a) | 1,599 | $ | 31,660 | |||||
Parkway Properties, Inc.(a) | 26,000 | 444,080 | ||||||
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475,740 | ||||||||
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TOTAL COMMON STOCKS – LONG – DOMESTIC | 27,961,335 | |||||||
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Common Stocks – Long – International – 9.27% | ||||||||
Consumer Staples – 1.18% | ||||||||
Diageo PLC(a) ADR | 3,400 | 389,504 | ||||||
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Financials – 6.82% | ||||||||
Arch Capital Group Ltd.(a)* | 5,300 | 384,091 | ||||||
Endurance Specialty Holdings Ltd.(a) | 8,200 | 540,872 | ||||||
RenaissanceRe Holdings Ltd.(a) | 3,300 | 365,508 | ||||||
Validus Holdings Ltd. | 9,600 | 452,928 | ||||||
XL Group PLC(a) | 13,200 | 503,976 | ||||||
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2,247,375 | ||||||||
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Health Care – 1.27% | ||||||||
AstraZeneca PLC | 5,200 | 177,060 | ||||||
Roche Holding AG | 900 | 241,208 | ||||||
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418,268 | ||||||||
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TOTAL COMMON STOCKS – LONG – INTERNATIONAL | 3,055,147 | |||||||
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Contracts | ||||||||
Options Purchased – Long – 0.06% | ||||||||
Kohls Corp., Call @ $60, Expiring January 2016 | 55 | 275 | ||||||
Kohls Corp., Call @ $65, Expiring April 2016 | 55 | 825 | ||||||
PayPal Holdings, Inc., Call @ $40, Expiring January 2016 | 52 | 1,508 | ||||||
PayPal Holdings, Inc., Call @ $45, Expiring January 2017 | 42 | 8,778 | ||||||
Universal Health Services, Inc., Put @ $105, Expiring December 2015 | 16 | 520 | ||||||
Universal Health Services, Inc., Put @ $105, Expiring January 2016 | 22 | 2,310 |
See accompanying notes which are an integral part of these financial statements.
11
LS Opportunity Fund
Schedule of Investments – continued
November 30, 2015 (Unaudited)
Options Purchased – Long – 0.06% – continued | Contracts | Fair Value | ||||||
Universal Health Services, Inc., Put @ $105, Expiring April 2016 | 16 | $ | 5,360 | |||||
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TOTAL OPTIONS PURCHASED – LONG | 19,576 | |||||||
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TOTAL INVESTMENTS – LONG – 94.22% | 31,036,058 | |||||||
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TOTAL SECURITIES SOLD SHORT – (26.63)% | (8,772,986 | ) | ||||||
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OTHER ASSETS IN EXCESS OF LIABILITIES – 32.41% | 10,677,761 | |||||||
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TOTAL NET ASSETS – 100.00% | $ | 32,940,833 | ||||||
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(a) | All or a portion of the security is held as collateral for securities sold short. The fair value of this collateral on November 30, 2015 was $26,372,739. |
* | Non-income producing security. |
ADR | – American Depositary Receipt |
The sectors shown on the schedule of investments are based on Global Industry Classification Standard, or GICS® (“GICS”). The GICS was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC (“S&P”). GICS is a service mark of MSCI, Inc. and S&P and has been licensed for use by Huntington Asset Services, Inc.
See accompanying notes which are an integral part of these financial statements.
12
LS Opportunity Fund
Schedule of Securities Sold Short
November 30, 2015 (Unaudited)
Common Stocks – Short – Domestic – (18.82)% | Shares | Fair Value | ||||||
Consumer Discretionary – (0.64)% | ||||||||
Brinker International, Inc. | (4,600 | ) | $ | (209,852 | ) | |||
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Consumer Staples – (2.09)% | ||||||||
Kellogg Co. | (10,000 | ) | (687,700 | ) | ||||
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Energy – (0.94)% | ||||||||
Chevron Corp. | (3,400 | ) | (310,488 | ) | ||||
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Financials – (14.65)% | ||||||||
Ameriprise Financial, Inc. | (3,500 | ) | (395,325 | ) | ||||
AmTrust Financial Services, Inc. | (7,800 | ) | (487,578 | ) | ||||
Arthur J Gallagher & Co. | (8,200 | ) | (358,750 | ) | ||||
Bank of New York Mellon Corp./The | (7,500 | ) | (328,800 | ) | ||||
Cincinnati Financial Corp. | (6,800 | ) | (415,548 | ) | ||||
Eaton Vance Corp. | (8,900 | ) | (319,688 | ) | ||||
Horace Mann Educators Corp. | (7,400 | ) | (258,482 | ) | ||||
Markel Corp.* | (810 | ) | (733,188 | ) | ||||
Prudential Financial, Inc. | (3,900 | ) | (337,545 | ) | ||||
Travelers Cos., Inc./The | (4,800 | ) | (549,936 | ) | ||||
Trustmark Corp. | (11,800 | ) | (297,950 | ) | ||||
Unum Group | (9,400 | ) | (344,792 | ) | ||||
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(4,827,582 | ) | |||||||
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Information Technology – (0.50)% | ||||||||
Apple, Inc. | (1,400 | ) | (165,620 | ) | ||||
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TOTAL COMMON STOCKS – SHORT – DOMESTIC | (6,201,242 | ) | ||||||
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Common Stocks – Short – International – (7.81)% | ||||||||
Financials – (7.81)% | ||||||||
ACE Ltd. | (2,800 | ) | (321,580 | ) | ||||
Commonwealth Bank of Australia | (9,200 | ) | (529,506 | ) | ||||
Everest Re Group Ltd. | (1,800 | ) | (331,992 | ) | ||||
HSBC Holdings PLC ADR | (6,900 | ) | (275,310 | ) | ||||
SCOR SE | (10,500 | ) | (411,643 | ) | ||||
Third Point Reinsurance Ltd.* | (12,600 | ) | (179,046 | ) | ||||
UBS Group AG | (19,900 | ) | (381,284 | ) |
See accompanying notes which are an integral part of these financial statements.
13
LS Opportunity Fund
Schedule of Securities Sold Short – continued
November 30, 2015 (Unaudited)
Common Stocks –Short –International –(7.81)% – continued | Shares | Fair Value | ||||||
Financials – (7.81)% – continued | ||||||||
Westpac Banking Corp. | (6,069 | ) | $ | (141,383 | ) | |||
|
| |||||||
TOTAL COMMON STOCKS – SHORT – INTERNATIONAL | (2,571,744 | ) | ||||||
|
| |||||||
TOTAL SECURITIES SOLD SHORT – (26.63)% | $ | (8,772,986 | ) | |||||
|
|
* | Non-dividend expense producing security. |
ADR | – American Depositary Receipt |
The sectors shown on the schedule of securities sold short are based on Global Industry Classification Standard, or GICS® (“GICS”). The GICS was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC (“S&P”). GICS is a service mark of MSCI, Inc. and S&P and has been licensed for use by Huntington Asset Services, Inc.
See accompanying notes which are an integral part of these financial statements.
14
LS Opportunity Fund
Statement of Assets and Liabilities
November 30, 2015
(Unaudited)
Assets | ||||
Investments in securities at fair value (cost $30,913,747) | $ | 31,036,058 | ||
Cash(a) | 10,812,651 | |||
Foreign currencies, at fair value (Cost $2,047) | 1,979 | |||
Receivable for fund shares sold | 50 | |||
Dividends receivable | 50,898 | |||
Prepaid expenses | 66,200 | |||
|
| |||
Total Assets | 41,967,836 | |||
|
| |||
Liabilities | ||||
Investment securities sold short, at fair value (proceeds $8,553,755) | 8,772,986 | |||
Payable for fund shares redeemed | 174,594 | |||
Dividend expense payable on short positions | 25,847 | |||
Payable to Adviser | 12,965 | |||
Payable to administrator, fund accountant and transfer agent | 12,107 | |||
Other accrued expenses | 28,504 | |||
|
| |||
Total Liabilities | 9,027,003 | |||
|
| |||
Net Assets | $ | 32,940,833 | ||
|
| |||
Net Assets consist of: | ||||
Paid-in capital | $ | 33,284,351 | ||
Accumulated undistributed net investment loss | (264,427 | ) | ||
Accumulated undistributed net realized gain | 18,050 | |||
Net unrealized depreciation on: | ||||
Investment securities and securities sold short | (96,920 | ) | ||
Foreign currency | (221 | ) | ||
|
| |||
Net Assets | $ | 32,940,833 | ||
|
| |||
Shares outstanding (unlimited number of shares authorized, no par value) | 2,765,142 | |||
|
| |||
Net asset value (“NAV”) and offering price per share | $ | 11.91 | ||
|
| |||
Redemption price per share (NAV * 98%)(b) | $ | 11.67 | ||
|
|
(a) | See Note 2 in the Notes to Financial Statements regarding restricted cash. |
(b) | The Fund charges a 2.00% redemption fee on shares redeemed in 60 days or less of purchase. Share are redeemed at the NAV if held longer than 60 calendar days. |
See accompanying notes which are an integral part of these financial statements.
15
LS Opportunity Fund
Statement of Operations
For the six months ended November 30, 2015
(Unaudited)
Investment Income | ||||
Dividend income | $ | 487,264 | ||
|
| |||
Total investment income | 487,264 | |||
|
| |||
Expenses | ||||
Investment Adviser | 444,938 | |||
Administration | 23,839 | |||
Fund accounting | 19,222 | |||
Transfer agent | 30,458 | |||
Legal | 58,724 | |||
Audit | 8,250 | |||
Trustee | 6,857 | |||
Compliance services | 1,501 | |||
Miscellaneous | 79,077 | |||
Other – short sale interest and overdraft expense | 89,673 | |||
Dividend expense on securities sold short | 161,316 | |||
|
| |||
Total expenses | 923,855 | |||
|
| |||
Fees waived by Adviser | (181,866 | ) | ||
|
| |||
Net operating expenses | 741,989 | |||
|
| |||
Net investment loss | (254,725 | ) | ||
|
| |||
Net Realized and Unrealized Gain | ||||
Net realized gain (loss) on: | ||||
Investment securities | 182,776 | |||
Securities sold short | (145,925 | ) | ||
Foreign currency | 4,938 | |||
Change in unrealized depreciation on: | ||||
Investment securities | 524,459 | |||
Securities sold short | (273,913 | ) | ||
Foreign currency | 459 | |||
|
| |||
Net realized and unrealized gain on investments, short securities, options, foreign currency and foreign currency contracts | 292,794 | |||
|
| |||
Net increase in net assets resulting from operations | $ | 38,069 | ||
|
|
See accompanying notes which are an integral part of these financial statements.
16
LS Opportunity Fund
Statements of Changes in Net Assets
For the Six Months Ended November 30, 2015 | For the Year Ended May 31, 2015 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets due to: | ||||||||
Operations | ||||||||
Net investment loss | $ | (254,725 | ) | $ | (2,963,413 | ) | ||
Net realized gain on investment securities, short securities, options and foreign currency | 41,789 | 13,997,559 | ||||||
Net change in unrealized appreciation (depreciation) of investment securities, short securities and foreign currency | 251,005 | (9,488,654 | ) | |||||
|
|
|
| |||||
Net increase in net assets resulting from operations | 38,069 | 1,545,492 | ||||||
|
|
|
| |||||
Distributions From: | ||||||||
Net realized gains | (3,998,817 | ) | (3,344,132 | ) | ||||
|
|
|
| |||||
Total distributions | (3,998,817 | ) | (3,344,132 | ) | ||||
|
|
|
| |||||
Capital Transactions | ||||||||
Proceeds from shares sold | 927,659 | 100,954,218 | ||||||
Reinvestment of distributions | 3,928,499 | 3,259,260 | ||||||
Amount paid for shares redeemed | (64,231,219 | ) | (156,003,469 | ) | ||||
Proceeds from redemption fees (a) | 7,924 | — | ||||||
|
|
|
| |||||
Net decrease in net assets resulting from capital transactions | (59,367,137 | ) | (51,789,991 | ) | ||||
|
|
|
| |||||
Total Decrease in Net Assets | (63,327,885 | ) | (53,588,631 | ) | ||||
|
|
|
| |||||
Net Assets | ||||||||
Beginning of period | 96,268,718 | 149,857,349 | ||||||
|
|
|
| |||||
End of period | $ | 32,940,833 | $ | 96,268,718 | ||||
|
|
|
| |||||
Accumulated undistributed net investment loss | $ | (264,427 | ) | $ | (9,702 | ) | ||
|
|
|
| |||||
Share Transactions | ||||||||
Shares sold | 76,197 | 7,821,644 | ||||||
Shares issued in reinvestment of distributions | 331,239 | 253,639 | ||||||
Shares redeemed | (5,312,330 | ) | (12,187,993 | ) | ||||
|
|
|
| |||||
Net decrease in share transactions | (4,904,894 | ) | (4,112,710 | ) | ||||
|
|
|
|
(a) | The Fund charges a 2% redemption fee on shares redeemed in 60 days or less of purchase. Share are redeemed at the NAV if held longer than 60 calendar days. |
See accompanying notes which are an integral part of these financial statements.
17
LS Opportunity Fund
Financial Highlights
(For a share outstanding during each period)
For the Six Months Ended November 30, 2015 | For the Fiscal Year Ended May 31, 2015 | For the Fiscal Year Ended May 31, 2014 | For the Fiscal Year Ended May 31, 2013 | For the Fiscal Year Ended May 31, 2012 | For the Period Ended May 31, 2011(a) | |||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Selected Per Share Data: | ||||||||||||||||||||||||
Net asset value, beginning of period | $ | 12.55 | $ | 12.72 | $ | 12.04 | $ | 10.29 | $ | 11.45 | $ | 10.00 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | (0.09 | ) | (0.42 | ) | (0.26 | )(b) | (0.24 | )(b) | (0.23 | )(b) | (0.17 | )(b) | ||||||||||||
Net realized and unrealized gain (loss) on investments | 0.20 | 0.49 | 1.44 | 1.99 | (0.91 | ) | 1.62 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | 0.11 | 0.07 | 1.18 | 1.75 | (1.14 | ) | 1.45 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Less Distributions to Shareholders: | ||||||||||||||||||||||||
From net realized gains | (0.75 | ) | (0.24 | ) | (0.50 | ) | — | (0.02 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Redemption fees | — | (c) | — | — | (c) | — | (c) | — | (c) | — | (c) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net asset value, end of period | $ | 11.91 | $ | 12.55 | $ | 12.72 | $ | 12.04 | $ | 10.29 | $ | 11.45 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total Return(d)(e) | 0.89 | %(f) | 0.50 | % | 9.72 | % | 17.01 | % | (9.92 | )% | 14.50 | %(f) | ||||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||||||
Net assets, end of period (000) | $ | 32,941 | $ | 96,269 | $ | 149,857 | $ | 37,750 | $ | 48,864 | $ | 20,375 | ||||||||||||
Ratio of expenses to average net assets (g) | 2.95 | %(h) | 2.51 | % | 2.49 | % | 3.12 | %(i) | 3.16 | % | 2.99 | %(h) | ||||||||||||
Ratio of expenses to average net assets before waiver and reimbursement/recoupment by Adviser(g) | 3.67 | %(h) | 2.60 | % | 2.71 | % | 3.12 | % | 3.06 | % | 4.25 | %(h) | ||||||||||||
Ratio of net investment loss to average net assets | (1.01 | )%(h) | (1.72 | )% | (2.04 | )% | (2.22 | )% | (2.19 | )% | (2.25 | )%(h) | ||||||||||||
Portfolio turnover rate | 45.57 | %(f) | 551.53 | % | 312.34 | % | 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) | Includes dividend, interest and overdraft expense of 1.00% for the six months ended November 30, 2015, and 0.56%, 0.54%, 0.77%, 0.66% and 0.49% for periods ended May 31, 2015, 2014, 2013, 2012 and 2011, respectively. |
(h) | Annualized |
(i) | 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 4. Fees and Other Transactions with Affiliates and Other Service Providers) |
See accompanying notes which are an integral part of these financial statements.
18
LS Opportunity Fund
Notes to the Financial Statements
November 30, 2015
(Unaudited)
NOTE 1. ORGANIZATION
The LS Opportunity Fund (the “Fund”) is an 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 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 Prospector Partners, LLC (the “Sub-Adviser”) to serve as 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 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 Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services-Investment Companies”. 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 six months ended November 30, 2015, 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
19
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2015
(Unaudited)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued
Statement of Operations. During the six months ended November 30, 2015, the Fund did not incur any interest or penalties. The Fund is subject to examination by U.S. federal tax authorities for the last three tax years and the interim tax period since then.
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.
Security Transactions and Related Income – The Fund follows industry practice and records security transactions on the trade date for financial reporting purposes. The specific identification method is used for determining gains or losses for financial statements and income tax purposes. Dividend income and dividend expense are recorded on the ex-dividend date and interest income is recorded on an accrual basis. Dividend income from Real Estate Investment Trusts (REITS) and distributions form Limited Partnerships are recognized on the ex-date. The calendar year end classification of distributions received from REITS during the fiscal year are reported subsequent to year end; accordingly, the Fund estimates the character of REIT distributions based on the most recent information available. Income or loss from Limited Partnerships is reclassified among 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.
20
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2015
(Unaudited)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued
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 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 that would be 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
21
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2015
(Unaudited)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued
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 amount of loss may exceed the proceeds received in a short sale. 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, 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 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 $8,997,469 as of November 30, 2015.
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.
22
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2015
(Unaudited)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued
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 owned underlying security (a “protective put”) 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 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.
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
23
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2015
(Unaudited)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued
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, hold foreign currency except in connection with the purchase and sale of foreign portfolio securities.
Derivative Transactions – The following table identifies the effect of derivative instruments on the Statement of Operations for the six months ended November 30, 2015.
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 | |||||||||||||
Equity Risk: | ||||||||||||||||||
Call Options Purchased | Net realized and unrealized gain (loss) on investment securities | 302 | 98 | $ | (2,394 | ) | $ | (10,022 | ) | |||||||||
Equity Risk: | ||||||||||||||||||
Put Options Purchased | Net realized and unrealized gain (loss) on investment securities | 54 | — | — | (16,013 | ) |
The Fund is not subject to a master netting arrangement and its policy is to not offset assets and liabilities related to its investment in derivatives.
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. 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
24
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2015
(Unaudited)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – continued
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 – unadjusted quoted prices in active markets for identical investments and/or registered investment companies where the value per share is determined and published and is the basis for current transactions for identical assets or liabilities at the valuation date |
• | 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, exchange traded funds, 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.
25
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2015
(Unaudited)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – continued
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 Adviser 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 Adviser, in conformity with guidelines adopted by and subject to review by the Board. These securities will generally 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 are categorized as Level 1 securities.
Call and put options that the Fund invests in are generally traded on an exchange and 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.
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.
In accordance with the Trust’s good faith pricing guidelines, the Adviser 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 Adviser 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 Adviser’s opinion, the validity of market quotations appears to be questionable based on factors such as evidence of a thin market in the
26
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2015
(Unaudited)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – continued
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 Adviser 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.
The following is a summary of the inputs used to value the Fund’s investments as of November 30, 2015:
Valuation Inputs | ||||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 31,016,482 | $ | — | $ | — | $ | 31,016,482 | ||||||||
Options Purchased | 19,576 | — | — | 19,576 | ||||||||||||
Total | $ | 31,036,058 | $ | — | $ | — | $ | 31,036,058 |
* | Refer to Schedule of Investments for industry classifications. |
Valuation Inputs | ||||||||||||||||
Liabilities | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | (8,772,986 | ) | $ | — | $ | — | $ | (8,772,986 | ) | ||||||
Total | $ | (8,772,986 | ) | $ | — | $ | — | $ | (8,772,986 | ) |
* | 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, 2015.
NOTE 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES AND OTHER SERVICE PROVIDERS
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 six
27
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2015
(Unaudited)
NOTE 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES AND OTHER SERVICE PROVIDERS – continued
months ended November 30, 2015, the Adviser earned a fee of $444,938 from the Fund before the reimbursement described below.
The Adviser has contractually agreed to waive its management fee and/or reimburse certain Fund operating expenses, but only to the extent necessary so that the Fund’s net expenses (excluding interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, 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” (i.e., investment companies in which the Fund may invest), and expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement) do not exceed 1.95% of net assets. The contractual agreement is effective through September 30, 2016. For the six months ended November 30, 2015, the Adviser waived fees of $181,866. At November 30, 2015, the Adviser was owed $12,965 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 described above.
The amount subject to repayment by the Fund pursuant to the aforementioned conditions at November 30, 2015 was:
Amount | Recoverable through May 31, | |||
$159,710 | 2017 | |||
148,331 | 2018 | |||
181,866 | 2019 |
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 Ultimus Asset Services, LLC (formerly Huntington Asset Services, Inc. – see Subsequent Events) (“Ultimus”), 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 six months ended November 30, 2015, Ultimus earned fees of $23,839 for administrative services provided to the Fund. At November 30, 2015, the Fund owed Ultimus $1,988 for administrative services. Certain officers of the Trust are members
28
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2015
(Unaudited)
NOTE 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES AND OTHER SERVICE PROVIDERS – continued
of management and/or employees of Ultimus. A trustee of the Trust is a member of management of Ultimus. Ultimus operates as a wholly-owned subsidiary of Ultimus Fund Solutions, LLC, the parent company of Unified Financial Securities, LLC (the “Distributor”).
The Trust retains Ultimus to act as the Fund’s transfer agent and to provide fund accounting services. For the six months ended November 30, 2015, Ultimus earned fees of $30,458 from the Fund for transfer agent services. For the six months ended November 30, 2015, Ultimus earned fees of $19,222 from the Fund for fund accounting services. At November 30, 2015, the Fund owed Ultimus $7,918 for transfer agent services and $2,201 for fund accounting services.
The Distributor acts as the principal underwriter of the Fund’s shares. There were no payments made to the Distributor by the Fund for the six months ended November 30, 2015. A trustee and 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. INVESTMENT TRANSACTIONS
For the six months ended November 30, 2015, purchases and sales of investment securities and securities sold short, other than short-term investments, were as follows:
Purchases | ||||
U.S. Government Obligations | $ | — | ||
Other | 27,988,096 | |||
Sales | ||||
U.S. Government Obligations | $ | — | ||
Other | 61,864,138 |
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.
29
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2015
(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, 2015, National Financial Services, Inc. (“NFS”) owned, as record shareholder, 72% of the outstanding shares of the Fund. It is not known whether NFS or any of the underlying beneficial owners owned or controlled 25% or more of the voting securities of the Fund.
NOTE 8. FEDERAL TAX INFORMATION
At November 30, 2015, the appreciation (depreciation) of investments, net of proceeds for investment securities sold short, for tax purposes was as follows:
Amount | ||||
Gross Unrealized Appreciation | $ | 1,824,831 | ||
Gross Unrealized (Depreciation) | (1,945,483 | ) | ||
|
| |||
Net Unrealized Depreciation | $ | (120,652 | ) | |
|
|
At November 30, 2015, the aggregate cost of securities, net of proceeds for investment securities sold short, for federal income tax purposes, was $22,383,724.
The tax characterization of distributions for the fiscal year ended May 31, 2015 was as follows:
2015 | ||||
Distributions paid from: | ||||
Long-term Capital Gain | $ | 3,344,132 | ||
|
|
At May 31, 2015, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Undistributed Ordinary Income | $ | 2,549,871 | ||
Undistributed long-term capital gains | 1,448,940 | |||
Accumulated capital and other losses | (9,702 | ) | ||
Unrealized appreciation/(depreciation) | (371,879 | ) | ||
|
| |||
$ | 3,617,230 | |||
|
|
The difference between book basis and tax basis unrealized appreciation is primarily attributable to the tax deferral of wash losses.
30
LS Opportunity Fund
Notes to the Financial Statements – continued
November 30, 2015
(Unaudited)
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 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 disclosure and/or adjustments resulting from subsequent events through the date these financials were issued. On November 13, 2015, Huntington Bancshares, Inc. entered into an agreement to sell Huntington Asset Services, Inc. and Unified Financial Services, Inc. to Ultimus Fund Solutions, LLC. The sale closed on December 31, 2015. Management has determined that there were no additional items requiring additional disclosure.
NOTE 11. PROXY VOTING RESULTS
On September 17, 2015, a special meeting of the shareholders of the Fund was held at the offices of the Trust for the purpose of approving a new sub-advisory agreement between Long Short Advisors, LLC and Prospector Partners, LLC and to approve the implementation of a “multi-manager” arrangement whereby Long Short Advisors, LLC, under certain circumstances would be able to hire and replace sub-advisers for the Fund without obtaining shareholder approval.
Below are the voting results for the Fund from the special meeting:
For | Against | Abstain | ||||||||||
To approve a new sub-advisory agreement between Long Short Advisors, LLC and Prospector Partners, LLC on behalf of the Fund: | 3,603,575 | 1,677 | 3,013 |
For | Against | Abstain | ||||||||||
To approve the implementation of a “multi-manager” arrangement whereby Long Short Advisors, LLC, under certain circumstances would be able to hire and replace sub-advisers for the Fund without obtaining shareholder approval: | 259,539 | 3,344,678 | 4,046 |
31
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.
32
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 Mullins
OFFICERS
R. Jeffrey Young, Principal Executive Officer and President
Bryan W. Ashmus, Principal Financial Officer and Treasurer
John C. Swhear, Chief Compliance Officer, AML Officer and Vice President
Carol J. Highsmith, Vice President and Secretary
Matthew J. Miller, Vice President
INVESTMENT ADVISOR
Long Short Advisors, LLC
1818 Market Street, 33rd Floor, Suite 3323
Philadelphia, PA 19103
DISTRIBUTOR
Unified Financial Securities, LLC
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, Suite 310
Leawood, KS 66211
CUSTODIAN
Citibank, N.A.
388 Greenwich Street
New York, NY 10013
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT
Ultimus Asset Services, LLC
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, LLC
Member FINRA/SIPC
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. |
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 | 1/28/2016 |
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 | 1/28/2016 | |
By | /s/ Bryan W. Ashmus | |
Bryan W. Ashmus, Treasurer and Principal Financial Officer | ||
Date | 1/28/2016 |