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)
Ultimus Asset Services, LLC | 225 Pictoria Drive, Suite 450 | Cincinnati, OH 45246 | ||
(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: 513-587-3400
Date of fiscal year end: 10/31
Date of reporting period: 4/30/16
Item 1. Reports to Stockholders.
Semi-Annual Report
April 30, 2016
Fund Adviser:
Granite Investment Advisors, Inc.
6 Eagle Square, 3rd Floor
Concord, New Hampshire 03301
Toll Free (888) 442-9893
INVESTMENT RESULTS – (Unaudited)
Total Returns* (For the periods ended April 30, 2016) | ||||||||||||
Average Annual Returns | ||||||||||||
Six Month | One Year | Since Inception (December 22, 2011) | ||||||||||
Granite Value Fund | 1.07 | % | -6.07 | % | 8.21 | % | ||||||
S&P 500® Index** | 0.43 | % | 1.21 | % | 14.76 | % | ||||||
Russell 1000® Value Index** | 1.93 | % | -0.40 | % | 14.24 | % |
Total annual operating expenses, as disclosed in the Granite Value Fund’s (“the Fund”) prospectus dated February 29, 2016, were 2.53% of average daily net assets (1.36% after fee waivers/expense reimbursements by Granite Investment Advisors, Inc. (“the Adviser”)). The Investment Adviser has contractually agreed to waive or limit its fees and to assume other expenses of the Fund until February 28, 2017, so that the Total Annual Fund Operating Expenses does not exceed 1.35%. 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, 12b-1 fees; and extraordinary expenses and indirect expenses (such as “acquired fund fees and expenses”). Additional information pertaining to the Fund’s expense ratios as of April 30, 2016 can be found in the financial highlights.
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. Current performance of the Fund may be lower or higher than the performance quoted. The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. Performance data current to the most recent month end may be obtained by calling 1-888-442-9893.
* | Return figures reflect any change in price per share and assume the reinvestment of all distributions. |
** | The S&P 500® Index and the Russell 1000® Value Index are widely recognized unmanaged indices of equity securities and are representative of a broader domestic equity market and range of securities than is found in the Fund’s portfolio. Individuals cannot invest directly in an 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.
1
FUND HOLDINGS – (Unaudited)
1 | As a percentage of net assets. |
The investment objective of the Fund is to seek 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. The Fund’s Forms N-Q are available at the SEC’s website at www.sec.gov. The Fund’s Forms 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.
Summary of Fund 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 and held for the six month period, November 1, 2015 to April 30, 2016.
2
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” 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 ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second line of the table below is useful in comparing ongoing costs only and will not help you determine the relative costs of owning different funds.
Granite Value Fund | Beginning November 1, 2015 | Ending Account Value April 30, 2016 | Expenses Paid November 1, 2015 – | |||||||||
Actual* | $ | 1,000.00 | $ | 998.58 | $ | 6.73 | ||||||
Hypothetical** | $ | 1,000.00 | $ | 1,018.12 | $ | 6.80 |
* | Expenses are equal to the Fund’s annualized expense ratio of 1.35%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). |
** | Assumes a 5% return before expenses. |
3
GRANITE VALUE FUND
SCHEDULE OF INVESTMENTS
April 30, 2016 (Unaudited)
Common Stocks – 99.82% | Shares | Fair Value | ||||||
Consumer Discretionary – 19.71% | ||||||||
Carnival Corp. | 4,145 | $ | 203,312 | |||||
Comcast Corp. – Class A | 4,620 | 280,711 | ||||||
Foot Locker, Inc. | 3,040 | 186,778 | ||||||
General Motors Co. | 11,315 | 359,817 | ||||||
Mattel, Inc. | 9,115 | 283,385 | ||||||
Starz * | 8,260 | 224,755 | ||||||
TJX Cos., Inc./The | 3,260 | 247,173 | ||||||
Whirlpool Corp. | 930 | 161,950 | ||||||
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1,947,881 | ||||||||
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Consumer Staples – 9.29% | ||||||||
Coca-Cola Co./The | 7,000 | 313,600 | ||||||
Unilever PLC ADR | 8,340 | 374,132 | ||||||
Wal-Mart Stores, Inc. | 3,440 | 230,033 | ||||||
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917,765 | ||||||||
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Energy – 11.80% | ||||||||
Cimarex Energy Co. | 945 | 102,892 | ||||||
Royal Dutch Shell PLC ADR | 6,740 | 359,579 | ||||||
Schlumberger Ltd. | 2,755 | 221,337 | ||||||
Southwestern Energy Co. * | 20,735 | 278,471 | ||||||
Tenaris SA ADR | 7,545 | 204,243 | ||||||
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1,166,522 | ||||||||
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Financials – 19.13% | ||||||||
Alleghany Corp. * | 755 | 393,566 | ||||||
American International Group, Inc. | 6,125 | 341,897 | ||||||
Berkshire Hathaway, Inc. – Class B * | 3,320 | 482,994 | ||||||
Citigroup, Inc. | 6,855 | 317,249 | ||||||
MetLife, Inc. | 3,680 | 165,968 | ||||||
Wells Fargo & Co. | 3,785 | 189,174 | ||||||
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1,890,848 | ||||||||
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Health Care – 11.82% | ||||||||
C.R. Bard, Inc. | 1,060 | 224,900 | ||||||
Gilead Sciences, Inc. | 2,110 | 186,123 | ||||||
Johnson & Johnson | 2,770 | 310,462 | ||||||
Merck & Co., Inc. | 3,680 | 201,811 | ||||||
UnitedHealth Group, Inc. | 1,855 | 244,266 | ||||||
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1,167,562 | ||||||||
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See accompanying notes which are an integral part of these financial statements.
4
GRANITE VALUE FUND
SCHEDULE OF INVESTMENTS – (continued)
April 30, 2016 (Unaudited)
Common Stocks – 99.82% – continued | Shares | Fair Value | ||||||
Industrials – 11.88% | ||||||||
Boeing Co./The | 1,680 | $ | 226,464 | |||||
Caterpillar, Inc. | 2,755 | 214,119 | ||||||
General Electric Co. | 7,240 | 222,630 | ||||||
Honeywell International, Inc. | 2,095 | 239,396 | ||||||
United Technologies Corp. | 2,600 | 271,362 | ||||||
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1,173,971 | ||||||||
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Information Technology – 11.66% | ||||||||
Apple, Inc. | 2,575 | 241,381 | ||||||
Corning, Inc. | 9,770 | 182,406 | ||||||
Microsoft Corp. | 4,185 | 208,706 | ||||||
Oracle Corp. | 5,060 | 201,692 | ||||||
Western Union Co./The | 15,890 | 317,800 | ||||||
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1,151,985 | ||||||||
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Telecommunication Services – 2.33% | ||||||||
AT&T, Inc. | 5,935 | 230,397 | ||||||
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Utilities – 2.20% | ||||||||
Calpine Corp. * | 13,795 | 217,685 | ||||||
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Total Common Stocks (Cost $8,621,651) | 9,864,616 | |||||||
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Money Market Securities – 0.23% | ||||||||
Fidelity Prime Money Market Portfolio – Institutional Class, 0.44% (a) | 22,591 | 22,591 | ||||||
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Total Money Market Securities (Cost $22,591) | 22,591 | |||||||
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Total Investments – 100.05% (Cost $8,644,242) | 9,887,207 | |||||||
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Liabilities in Excess of Other Assets – (0.05)% | (4,600) | |||||||
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NET ASSETS – 100.00% | $ | 9,882,607 | ||||||
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(a) | Rate disclosed is the seven day yield as of April 30, 2016. |
* | Non-income producing security. |
ADR – American Depositary Receipt
See accompanying notes which are an integral part of these financial statements.
5
GRANITE VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2016 (Unaudited)
Assets | ||||
Investments in securities at fair value (cost $8,644,242) | $ | 9,887,207 | ||
Dividends receivable | 8,665 | |||
Receivable from Adviser | 4,964 | |||
Prepaid expenses | 11,928 | |||
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Total Assets | 9,912,764 | |||
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Liabilities | ||||
Payable to administrator, fund accountant and transfer agent | 16,470 | |||
Payable to custodian | 614 | |||
Payable to trustees | 291 | |||
Other accrued expenses | 12,782 | |||
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Total Liabilities | 30,157 | |||
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Net Assets | $ | 9,882,607 | ||
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Net Assets consist of: | ||||
Paid-in capital | $ | 8,718,398 | ||
Accumulated undistributed net investment income | 27,232 | |||
Accumulated undistributed net realized loss from investment transactions | (105,988 | ) | ||
Net unrealized appreciation on investments | 1,242,965 | |||
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Net Assets | $ | 9,882,607 | ||
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Shares outstanding (unlimited number of shares authorized, no par value) | 761,745 | |||
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Net asset value ("NAV") and offering price per share | $ | 12.97 | ||
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Redemption price per share (NAV * 98%) (a) | $ | 12.71 | ||
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(a) | 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.
6
GRANITE VALUE FUND
STATEMENT OF OPERATIONS
For the six months ended April 30, 2016 (Unaudited)
Investment Income | ||||
Dividend income (net of foreign taxes withheld of $46) | $ | 116,297 | ||
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Total investment income | 116,297 | |||
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Expenses | ||||
Investment Adviser | 49,495 | |||
Administration | 18,648 | |||
Fund accounting | 12,432 | |||
Transfer agent | 19,799 | |||
Legal | 8,680 | |||
Registration | 9,121 | |||
Custodian | 1,902 | |||
Audit | 7,708 | |||
Trustee | 2,245 | |||
Report printing | 7,401 | |||
Miscellaneous | 7,639 | |||
Overdraft interest | 256 | |||
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Total expenses | 145,326 | |||
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Fees waived and reimbursed by Adviser | (78,347 | ) | ||
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Net operating expenses | 66,979 | |||
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Net investment income | 49,318 | |||
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Net Realized and Unrealized Gain on Investments | ||||
Net realized gain on investment securities transactions | 29,634 | |||
Net change in unrealized appreciation/(depreciation) of investment securities | (8,333 | ) | ||
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Net realized and unrealized gain on investments | 21,301 | |||
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Net increase in net assets resulting from operations | $ | 70,619 | ||
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See accompanying notes which are an integral part of these financial statements.
7
GRANITE VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 2016 (Unaudited) | For the Year Ended October 31, 2015 | |||||||
Decrease in Net Assets due to: | ||||||||
Operations | ||||||||
Net investment income | $ | 49,318 | $ | 50,264 | ||||
Net realized gain (loss) on investment securities transactions | 29,634 | (130,519 | ) | |||||
Net change in unrealized (depreciation) of investment securities | (8,333 | ) | (573,813 | ) | ||||
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Net increase (decrease) in net assets resulting from operations | 70,619 | (654,068 | ) | |||||
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Distributions | ||||||||
From net investment income | (53,722 | ) | (31,319 | ) | ||||
From net realized gains | – | (484,050 | ) | |||||
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Total distributions | (53,722 | ) | (515,369 | ) | ||||
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Capital Transactions | ||||||||
Proceeds from shares sold | 264,185 | 1,720,031 | ||||||
Proceeds from redemption fees (a) | 25 | – | ||||||
Reinvestment of distributions | 44,896 | 446,979 | ||||||
Amount paid for shares redeemed | (1,165,061 | ) | (3,488,076 | ) | ||||
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Net decrease in net assets resulting from capital transactions | (855,955 | ) | (1,321,066 | ) | ||||
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Total Decrease in Net Assets | (839,058 | ) | (2,490,503 | ) | ||||
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Net Assets | ||||||||
Beginning of period | 10,721,665 | 13,212,168 | ||||||
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End of period | $ | 9,882,607 | $ | 10,721,665 | ||||
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Accumulated undistributed net investment income included in net assets at end of period | $ | 27,232 | $ | 31,636 | ||||
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Share Transactions | ||||||||
Shares sold | 21,204 | 125,135 | ||||||
Shares issued in reinvestment of distributions | 3,558 | 33,607 | ||||||
Shares redeemed | (93,981 | ) | (257,087 | ) | ||||
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Net decrease in shares outstanding | (69,219 | ) | (98,345 | ) | ||||
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(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.
8
GRANITE VALUE FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding during each period)
For the Six Months Ended April 30, 2016 (Unaudited) | For the Year Ended October 31, 2015 | For the Year Ended October 31, 2014 | For the Year Ended October 31, 2013 | For the Period Ended October 31, 2012 (a) | ||||||||||||||||
Selected Per Share Data: | ||||||||||||||||||||
Net asset value, beginning of period | $ | 12.90 | $ | 14.22 | $ | 13.84 | $ | 11.24 | $ | 10.00 | ||||||||||
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Investment operations: | ||||||||||||||||||||
Net investment income | 0.07 | 0.05 | 0.02 | 0.02 | – | |||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.07 | (0.80 | ) | 0.74 | 2.68 | 1.19 | ||||||||||||||
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Total from investment operations | 0.14 | (0.75 | ) | 0.76 | 2.70 | 1.24 | ||||||||||||||
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Less distributions to shareholders from: | ||||||||||||||||||||
Net investment income | (0.07 | ) | (0.03 | ) | (0.02 | ) | (0.10 | ) | – | |||||||||||
Net realized gains | – | (0.54 | ) | (0.36 | ) | – | – | |||||||||||||
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Total distributions | (0.07 | ) | (0.57 | ) | (0.38 | ) | (0.10 | ) | – | |||||||||||
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Paid in capital from redemption fees | – | (c) | – | – | (c) | – | – | (c) | ||||||||||||
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Net asset value, end of period | $ | 12.97 | $ | 12.90 | $ | 14.22 | $ | 13.84 | $ | 11.24 | ||||||||||
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Total Return (d) | 1.07 | %(e) | -5.37 | % | 5.65 | % | 24.21 | % | 12.40 | %(e) | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000) | $ | 9,883 | $ | 10,722 | $ | 13,212 | $ | 10,577 | $ | 4,750 | ||||||||||
Ratio of net expenses to average net assets | 1.35 | %(f) | 1.36 | %(g) | 1.35 | % | 1.35 | % | 1.35 | %(f) | ||||||||||
Ratio of expenses to average net assets before waiver and reimbursement | 2.93 | %(f) | 2.53 | % | 2.39 | % | 3.32 | % | 8.11 | %(f) | ||||||||||
Ratio of net investment income to average net assets | 1.00 | %(f) | 0.40 | % | 0.17 | % | 0.27 | % | 0.55 | %(f) | ||||||||||
Portfolio turnover rate | 21 | %(e) | 32 | % | 30 | % | 33 | % | 20 | %(e) |
(a) | For the period December 22, 2011 (commencement of operations) to October 31, 2012. |
(b) | Calculated using the average shares method. |
(c) | Resulted in 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 distributions. |
(e) | Not annualized. |
(f) | Annualized. |
(g) | Includes 0.01% overdraft fees. |
See accompanying notes which are an integral part of these financial statements.
9
GRANITE VALUE FUND
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 (Unaudited)
NOTE 1. ORGANIZATION
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 Trust 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 commenced operations December 22, 2011. The Fund’s investment adviser is Granite Investment Advisors, Inc. (the “Adviser”). The investment objective of the Fund is to provide long-term capital appreciation.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board 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”).
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.
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.
During the period ended April 30, 2016, the Fund did not have a liability for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period, the Fund did not incur any interest or penalties.
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 (using procedures approved by the Board).
Security Transactions and Related Income – The Fund follows industry practice and records security transactions on the trade date for financial reporting purposes. The specific identification method is used for determining gains or losses for financial statements and income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Discounts and premiums on securities purchased are 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.
10
GRANITE VALUE FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 (Unaudited)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued
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.
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 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 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 among the components of net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications have no effect on net assets, results of operations or net asset values per share of the Fund. There were no such material reclassifications made as of April 30, 2016.
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS
Fair value is defined as the price that the Fund would receive upon selling an investment in a orderly transaction to an independent buyer in the principal or most advantageous market of the investment. GAAP established 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, (ex., the risk inherent in a particular valuation technique used to measure fair value including items such as 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) |
11
GRANITE VALUE FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 (Unaudited)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – 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 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 at the last quoted sale price. Lacking a last sale price, an exchange traded security is generally valued at its last bid price. Securities traded in the NASDAQ over-the-counter market are generally valued at the NASDAQ Official Closing Price. When using the market quotations or close prices provided by the pricing service and when the market is considered active, the security is classified as a Level 1 security. Sometimes, an equity security owned by the Fund will be valued by the pricing service with factors other than market quotations or when the market is considered inactive. When this happens, the security is classified as a Level 2 security. When market quotations are not readily available, when the Fund determines that the market quotation or the price provided by the pricing service does not accurately reflect the current fair value, or when restricted or illiquid securities are being valued, such securities are valued as determined in good faith by the Fund, in conformity with policies adopted by and subject to review by the Board. These securities are generally categorized as Level 3 securities.
Investments in open-end 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 valuation policies, 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 that are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market prices 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. Fair-value 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.
The following is a summary of the inputs used to value the Fund’s investments as of April 30, 2016:
Valuation Inputs | ||||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 9,864,616 | $ | – | $ | – | $ | 9,864,616 | ||||||||
Money Market Securities | 22,591 | – | – | 22,591 | ||||||||||||
Total | $ | 9,887,207 | $ | – | $ | – | $ | 9,887,207 |
* | Refer to the Schedule of Investments for industry classifications. |
12
GRANITE VALUE FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 (Unaudited)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – continued
The Fund did not hold any investments at any time during the reporting period for which after significant observable inputs (Level 2) were used in determining fair value. 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 April 30, 2016.
NOTE 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the management agreement, on behalf of the Fund (the “Agreement”), the Adviser manages the Fund’s investments subject to approval 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 1.00% of the average daily net assets of the Fund. For the period ended April 30, 2016, the Adviser earned a fee of $49,495 from the Fund before the fee waivers or expense reimbursement described below.
The Adviser has contractually agreed to waive or limit its fees and to assume other expenses of the Fund until February 28, 2017, so that Total Annual Fund Operating Expenses, excluding brokerage fees and commissions borrowing costs (such as interest and dividend expenses on securities sold short), taxes, 12b-1, fees, and extraordinary expenses and indirect expenses (such as “acquired fund fees and expenses”) incurred by the Fund in any fiscal year, do not exceed 1.35% of the Fund’s average daily net assets. Each waiver or reimbursement of an expense by the Adviser is subject to recoupment by the Fund within the three fiscal years following the fiscal year in which the expense was incurred, provided total operating expense do not exceed the limitation in place at the time of the waiver reimbursement. For the period ended April 30, 2016, fees and expenses totaling $78,347 were waived or reimbursed by the Adviser and are subject to potential recoupment by the Adviser until October 31, 2019. At April 30, 2016, the Adviser owed the Fund $4,964.
The amounts subject to recoupment by the Adviser pursuant to the aforementioned conditions are as follows:
Amount | Recoverable through October 31, | |
$ 150,231 | 2016 | |
129,076 | 2017 | |
148,128 | 2018 | |
78,347 | 2019 |
The Trust retains Ultimus Asset Services, LLC (“Ultimus”), formerly Huntington Asset Services, Inc. (“HASI”), to provide the Fund with administration, accounting, transfer agent, and compliance services, including all regulatory reporting. For the period ended April 30, 2016, Ultimus earned fees of $18,648 for administration services provided to the Fund. At April 30, 2016, Ultimus was owed $6,147 from the Fund for administration services.
For the period ended April 30, 2016, Ultimus earned fees of $19,799 for transfer agent services to the Fund. At April 30, 2016, the Fund owed Ultimus $6,223 for transfer agent services. For the period ended April 30, 2016, Ultimus earned fees of $12,432 from the Fund for fund accounting services. At April 30, 2016, Ultimus was owed $4,099 from the Fund for fund accounting services.
13
GRANITE VALUE FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 (Unaudited)
NOTE 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES – continued
Certain officers and one Trustee of the Trust are employees of Ultimus. Unified Financial Securities, LLC (the “Distributor”) acts as the principal distributor of the Fund’s shares. Huntington National Bank is the custodian of the Fund’s investments (the “Custodian”). Effective at the close of business on December 31, 2015, Ultimus Fund Solutions, LLC acquired HASI and the Distributor from Huntington Bancshares, Inc. (“HBI”). Prior to January 1, 2016, the Custodian, HASI and the Distributor were under common control by HBI. For the period ended April 30, 2016, the Custodian earned fees of $5,370 for custody services provided to the Fund. At April 30, 2016, the Custodian was owed $726 from the Fund for custody services.
The Fund has adopted a 12b-1 Plan that permits the Fund to pay 0.25% of its average daily net assets to financial institutions that provide distribution and/or shareholder servicing. The Plan has not been activated as of April 30, 2016.
NOTE 5. PURCHASES AND SALES OF SECURITIES
For the period ended April 30, 2016, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations, were as follows:
Purchases | ||||
U.S. Government Obligations | $ | – | ||
Other | 2,083,545 | |||
Sales | ||||
U.S. Government Obligations | $ | – | ||
Other | 2,751,992 |
NOTE 6. 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 April 30, 2016, Charles Schwab & Co., Inc. for the benefit of its customers, owned 52.43%. The Trust does not know whether Charles Schwab & Co. or any of the underlying beneficial owners controlled 25% or more of the voting securities of the Fund.
NOTE 7. FEDERAL TAX INFORMATION
At April 30, 2016, the net unrealized appreciation (depreciation) of investments for tax purposes was as follows:
Gross Appreciation | $ | 1,465,757 | ||
Gross (Depreciation) | (222,792 | ) | ||
|
| |||
Net Appreciation (Depreciation) on Investments | $ | 1,242,965 | ||
|
|
At April 30, 2016, the aggregate cost of securities, excluding U.S. government obligations, for federal income tax purposes was $8,644,242 for the Fund.
14
GRANITE VALUE FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 (Unaudited)
NOTE 7. FEDERAL TAX INFORMATION – continued
The tax characterization of distributions for the fiscal year ended October 31, 2015 was as follows:
Distributions paid from: | 2015 | |||
Ordinary Income* | $ | 31,319 | ||
Long-Term Capital Gains | $ | 484,050 | ||
|
| |||
Total Distributions | $ | 515,369 | ||
|
|
* | Short term capital gain distributions are treated as ordinary income for tax purposes. |
At October 31, 2015, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Undistributed ordinary income | $ | 34,420 | ||
Undistributed long-term capital gain | – | |||
Accumulated capital and other losses | (138,406 | ) | ||
Net unrealized appreciation (depreciation) | 1,251,298 | |||
|
| |||
$ | 1,147,312 | |||
|
|
At October 31, 2015, for federal income tax purposes, the Fund had long-term capital loss carryforwards available to offset future gains and not subject to expiration in the amount of $135,621.
NOTE 8. 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 9. SUBSEQUENT EVENTS
Management of the Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date these financial statements were issued. There were no items requiring adjustment of the financial statements or additional disclosure.
15
OTHER INFORMATION
The Fund’s Statement of Additional Information (“SAI”) includes additional information about the trustees and is available without charge, upon request. You may call toll-free at (888) 442-9893 to request a copy of the SAI or to make shareholder inquiries.
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 is available without charge upon request by (1) calling the Fund at (888) 442-9893 and (2) from Fund documents filed with the Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov.
TRUSTEES
R. Jeffrey Young, Chairman
Ira Cohen
Andrea N. Mullins
OFFICERS
R. Jeffrey Young, Principal Executive Officer and President
John C. Swhear, Chief Compliance Officer, AML Officer and Vice President
Carol J. Highsmith, Vice President and Secretary
Matthew J. Miller, Vice President
Bryan W. Ashmus, Principal Financial Officer and Treasurer
INVESTMENT ADVISER
Granite Investment Advisors
6 Eagle Square, 3rd Floor
Concord, NH 03301
DISTRIBUTOR
Unified Financial Securities, LLC
9465 Counselors Row, Suite 200
Indianapolis, IN 46240
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Cohen Fund Audit Services Ltd.
1350 Euclid Avenue, Suite 800
Cleveland, OH 44115
LEGAL COUNSEL
The Law Offices of John H. Lively & Associates, Inc.
A member firm of The 1940 Act Law GroupTM
11300 Tomahawk Creek Parkway, Ste. 310
Leawood, KS 66211
CUSTODIAN
Huntington National Bank
41 South High Street
Columbus, OH 43215
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT
Ultimus Asset Services, LLC
225 Pictoria Drive, Suite 450
Cincinnati, OH 45246
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
16
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.
SOUND MIND INVESTING FUND (SMIFX)
SMI CONSERVATIVE
ALLOCATION FUND (SMILX)
SMI DYNAMIC
ALLOCATION FUND (SMIDX)
SMI BOND FUND (SMIUX)
SMI 50/40/10 FUND (SMIRX)
SEMI-ANNUAL REPORT |
APRIL 30, 2016 |
Fund Adviser:
SMI Advisory Services, LLC
P.O. BOX 547
Columbus, IN 47202
Toll Free (877) SMI-FUND
www.smifund.com
Dear Fellow Shareholder,
Ten years ago, in the summer of 2006, I wrote an editorial titled Years of Plenty, Years of Famine. In it, I told how Joseph has always been one of my favorite Bible characters. His roller-coaster ride from favorite son to slave to master of the house to prisoner to Viceroy of Egypt is both amazing and inspiring. The culmination of the story in Genesis 50:20 holds out hope to every believer going through difficult times: “You intended to harm me, but God intended it for good.” What an inspiring example of God at work in the affairs of men to accomplish His ultimate purposes!
The turning point of Joseph’s experience in Egypt occurs when he interprets a pair of dreams for Pharaoh. He realizes that Egypt will soon experience seven years of abundance, followed by seven years of famine. Joseph is put in charge of the preparations during the years of plenty, so that the people can survive the coming years of famine.
In that editorial, I suggested that America might have been facing a similar “years of plenty, years of famine” scenario. If that was a possibility, I wrote that we would be wise to consider the personal implications of Joseph’s story and start making appropriate preparations now, during the years of plenty, for any difficult years ahead.
The point of revisiting this 10 years later isn’t to take a victory lap, pointing out the financial crisis and economic trouble that began a couple of years later. Rather, it’s to re-examine some of the takeaways we gleaned then and see if there’s any beneficial application for us today.
America – and in fact the entire global economy – certainly faced a frightening economic storm in 2008-2009. Many wondered if the current financial/economic system would even survive. It has, but many believe the core issues that led to the financial crisis and global recession were never truly addressed. Rather than recognize the dangerous implications of our runaway debt, we’ve added trillions more. Rather than reform a financial system sorely lacking adequate controls, we implement stress tests to comfort ourselves that the massive banks we’ve allowed to grow even bigger are “safe” now. Rather than step back from the type of active and interventionist central-bank policies that helped lay the ground work for the initial financial crisis, we’ve doubled down with Quantitative Easings and negative interest-rate policies. And rather than our political leaders coming together to deal in a substantive way with the most important issues of our time, our politics are more fractured and divided than they’ve been in my lifetime.
Have the bankers and policymakers simply kicked the years-of-famine “can” further down the road, avoiding the worst of it for now only to ensure a future due date? We can only speculate. But we do know the Bible has many clear warnings about debt, so as was the case a decade ago, it doesn’t take a prophet to see that at some point our national debt addiction is likely to cause problems.
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Of much greater importance than our national problems are the protective principles God has provided to help us prepare individually for future storms. If we’re wise, we’ll use any current “years of plenty” to prepare for potential hardship in the future. We can do that by diligently working to get debt-free, funding an emergency-savings reserve, investing for the future, and diversifying broadly.
Joseph wisely set aside 20% of the harvested grain, and was able to save not only Egypt during the eventual famine, but the surrounding nations as well. That should be our goal – to be faithful stewards when times are good, in preparation for those times when they will not be. In being faithful this way, we may find ourselves being used, like Joseph, as instruments of God’s deliverance in times of distress. (Naturally, we shouldn’t be so preoccupied with the future that we fail to be generous givers now. God will provide!)
A major theme of Joseph’s story is that God is at work even in times of hardship. Like the ancient Israelites, many Americans turn to God during crisis, only to go back to their “old idols” when the threat recedes. Those crises can be widespread, as in 2008. Or they can be individual, as in the case of a neighbor or co-worker falling on hard times. In either case, having our own financial house in order may enable us to reach out and help, while also offering the spiritual food that truly satisfies.
Performance Review
Following the first stock market correction in four years in August 2015, stocks rallied through the end of October. The rally was short-lived however, as a second correction began to unfold as soon as the calendar flipped to 2016.
The first quarter of 2016 revealed how quickly stock-market sentiment can swing from one extreme to the other. The first six weeks were rough, with major stock indexes down more than 10%. Extreme fear was evident in the sentiment indicators as investors considered the risks of a brewing recession. Then, with an oil rally and a few benevolent words from Fed Chair Janet Yellen, investors decided the world wasn’t about to end after all. Stocks rallied strongly once again, with the Wilshire 5000 index rocketing +13.7% higher from its February low through the end of March, a span of only seven weeks.
What do you get when you follow a six-week correction with a seven-week recovery? A more or less flat quarter overall – but an emotional roller-coaster for investors. More broadly, the full six-month window covered by this report paints a similar picture: the S&P 500® Index (the “S&P 500”) started the period at 2,079.36 and ended it six months later at 2,065.30 – with a trip down as low as 1,810.10 in between!
These are the types of violent emotional whipsaw that makes some investors wonder if there’s any rhyme or reason to the market at all. But to seasoned investors, this type of action just reinforces one of the main pillars of SMI Advisory Services, LLC (“SMI”)’s investing approach: the importance of a diversified portfolio.
In recent years, SMI has encouraged readers to combine multiple strategies within their portfolios, precisely to guard against the type of emotional extremes produced by the market’s recent whipsaws. When the market was already down 11% just six weeks into the New Year, many investors were a half-step from a panic attack. But not SMI investors who had heeded the suggestion to diversify their portfolios using SMI’s Dynamic Asset Allocation (“DAA”) strategy. When the broader market was hitting its low on February 11, 2016, DAA was down just -3.15% for the year, and the fact that the strategy was completely out of stocks at that point leads us to believe that further stock-market losses would have been unlikely to
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cause significantly more damage. There was a huge peace-of-mind dividend that came along with that conservative portfolio allocation!
Naturally, when the market shifted in mid-February and started racing higher, conservative positions such as DAA languished while more aggressive strategies like Stock Upgrading and Sector Rotation benefitted. And while it can be frustrating to see a portion of your portfolio lagging, emotional extremes such as we’ve witnessed through the pair of market corrections during the past several months are a helpful reminder that it’s much easier to stick with a long-term investing plan when it is balanced enough that you don’t feel like the next bear market is likely to undo all your progress.
SMI Funds
Dynamic Asset Allocation (DAA) – Funds utilizing this strategy in at least part of their portfolios: SMIDX, SMILX* & SMIRX:
As we noted earlier, DAA did exactly what we believed it would during market corrections: significantly limiting losses and helping SMI investors avoid the deep dread many others felt when the market appeared ready to dive over the cliff. Once again, the Fed stepped in and kept that from happening. But part of the reason investors have grown so nervous is they intuitively know that central bankers can’t hold off bear markets forever.
While DAA fulfilled its primary purpose in readers’ portfolios during the first quarter, the strategy has also produced its own flavor of frustration. The stock market has thrown two 10%+ corrections and subsequent recoveries at us in less than a year. These rapid shifts between “risk-on” and “risk-off” have produced more trades and whipsaws than DAA normally sees.
Bottom-line, the system simply isn’t designed to respond to such rapid changes in market sentiment. But there’s a reason for that: historically, these types of sharp, fast, repeated swings are unusual. What we’ve experienced over the past year is about as challenging an environment as you could possibly design for a strategy like DAA. So we’re not especially surprised that its recent 12-month performance is among the poorer-performing of such periods in the past 40 years.
Yet despite these challenges, when the market corrected last August and again in February, DAA provided powerful reminders of its potential value and the protective properties it may add to a diversified portfolio.
Upgrading and Dynamic Asset Allocation Are Complementary Strategies
Although SMI Dynamic Allocation Fund (“SMIDX”) performance was more volatile than usual, it did continue to serve as an effective counterweight to the stock market’s performance. In January, as stocks fell, SMIDX outperformed. In February, it was the opposite: SMIDX fell while stocks outperformed. This aspect of DAA is probably underappreciated, as it gives SMI portfolios a more balanced feeling than our Upgrading-dominated portfolios typically had in the past.
Stock Upgrading – Funds utilizing this strategy in at least part of their portfolios: SMIFX, SMILX* & SMIRX:
The large-company dominated S&P 500 peaked roughly a year ago (May 2015), but many stocks peaked even earlier, back in the fall of 2014. While the market has provided a pair of sharp declines and
*Indicates this fund does not always contain the strategy being described.
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subsequent recoveries, there’s been no consistent long-term direction for quite some time now. Stock Upgrading is a trend-following strategy, and it’s going to underperform when the market bounces up and down sharply without really going anywhere. It’s impossible to know when the stock market will break out of this trading range, but we believe it eventually will. Our task is to stay disciplined and continue to keep our portfolios aligned with the recent trends, so that when the market does eventually break out, we’ll be positioned to benefit from it.
Going Direct With the SMI Funds
Slightly over two-thirds of the assets in the SMI Funds are owned through accounts held at other organizations (Fidelity, Schwab, TD Ameritrade, etc.). That’s perfectly fine. However, there are some advantages to having your account directly with the SMI Funds rather than through a third party.
The primary advantage of a direct account is the ability to buy or sell shares of the SMI Funds without paying any transaction fees. Most third-party accounts are charged some sort of transaction fee when the SMI Funds are bought or sold. Those fees can add up – particularly if you are regularly buying or selling shares in any of the SMI Funds. When your account is held directly with the SMI Funds, you never have to pay transaction fees. Additionally, in accounts held directly with the SMI Funds, the typical 2% redemption fee on shares sold within 60 days of purchase is waived if you are transferring money from one SMI Fund to another. To learn more about moving your account directly to the SMI Funds, visit www.smifund.com or call 1-877-SMI-FUND.
We appreciate the confidence you have placed in us to be a faithful steward of your assets, as you strive to be a faithful steward of His assets.
Sincerely,
Mark Biller
Senior Portfolio Manager
The Sound Mind Investing Funds
The SMI Fund lineup, shown below, now offers investors a way to mix and match professionally managed funds to custom tailor the risk level desired for their portfolio. If you’d like assistance customizing your portfolio in this manner, please call a Stewardship Advisor at (800) 796-4975.
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PERFORMANCE RESULTS – (Unaudited)
Total Return(a) (For the periods ended April 30, 2016) | ||||||||||||||||||||
Average Annual | ||||||||||||||||||||
Three Months | Six Months | One Year | Five Year | Ten Year | ||||||||||||||||
Sound Mind Investing Fund | 5.25% | -2.08% | -5.61% | 5.01% | 4.63% | |||||||||||||||
S&P 500® Index(b) | 7.05% | 0.43% | 1.21% | 11.02% | 6.91% | |||||||||||||||
Wilshire 5000® Total Market Index(b) | 7.70% | 0.27% | 0.33% | 10.52% | 6.90% |
Total annual operating expense, as disclosed in the Fund’s prospectus dated February 29, 2016, were 2.03% of average daily net assets, which includes acquired fund fees and expenses. All expenses are reflected in performance results. The Fund’s investment adviser contractually has agreed to waive its fee and reimburse expenses to the extent necessary to maintain Total Annual Fund Operating Expenses (excluding interest, taxes, brokerage commissions, other expenses which are capitalized in accordance with generally accepted accounting principles, extraordinary expenses, dividend expense on short sales, 12b-1 fees, and acquired fund fees and expenses) at 1.50% of the Fund’s average daily net assets through February 28, 2017. This expense cap may not be terminated prior to this date except by the Board of Trustees (the “Board”).
Total Return(a) (For the periods ended April 30, 2016) | ||||||||||||||||||||
Average Annual | ||||||||||||||||||||
Three Months | Six Months | One Year | Five Year | Since Inception (December 30, 2010) | ||||||||||||||||
SMI Conservative Allocation Fund | 1.74% | -0.20% | -5.49% | 3.44% | 4.17% | |||||||||||||||
Wilshire 5000® Total Market Index(b) | 7.70% | 0.27% | 0.33% | 10.52% | 11.62% | |||||||||||||||
Barclays Capital U.S. Aggregate Bond Index(b) | 2.02% | 2.82% | 2.72% | 3.60% | 3.74% | |||||||||||||||
Custom Benchmark(c) | 5.44% | 1.39% | 1.52% | 7.92% | 8.62% |
Total annual operating expense, as disclosed in the Fund’s prospectus dated February 29, 2016, were 1.55% of average daily net assets (1.89% before fee waivers/expense reimbursements by the Adviser), which includes acquired fund fees and expenses and reflects the fee waiver/expense reimbursement discussed below. All expenses are reflected in performance results. The Fund’s investment adviser contractually has agreed to waive its fee and reimburse expenses to the extent necessary to maintain Total Annual Fund Operating Expenses (excluding interest, taxes, brokerage commissions, other expenses which are capitalized in accordance with generally accepted accounting principles, extraordinary expenses, dividend expense on short sales, 12b-1 fees, and acquired fund fees and expenses) at 1.15% of the Fund’s average daily net assets through February 28, 2017. Each fee waiver or expense reimbursement by the Fund’s investment advisor 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 fee waiver or expense reimbursement. SMI Advisory Services, LLC (the “Adviser”) is also entitled to recoupment related to fees waived and expenses reimbursed with respect to the Predecessor Fund. This expense cap may not be terminated prior to this date except by the Board.
5
PERFORMANCE RESULTS – (Unaudited), (Continued)
Total Return(a) (For the periods ended April 30, 2016) | ||||||||||||||||
Average Annual | ||||||||||||||||
Three Months | Six Months | One Year | Since Inception (February 28, 2013) | |||||||||||||
SMI Dynamic Allocation Fund | 1.98% | -0.58% | -7.87% | 4.22% | ||||||||||||
Wilshire 5000® Total Market Index(b) | 7.70% | 0.27% | 0.33% | 12.19% | ||||||||||||
Barclays Capital U.S. Aggregate Bond Index(b) | 2.02% | 2.82% | 2.72% | 2.52% | ||||||||||||
Custom Benchmark(c) | 5.44% | 1.39% | 1.52% | 8.39% |
Total annual operating expense, as disclosed in the Fund’s prospectus dated February 29, 2016, were 1.38% of average daily net assets, which includes acquired fund fees and expenses. All expenses are reflected in performance results. The Fund’s adviser contractually has agreed to waive its fee and reimburse expenses to the extent necessary to maintain Total Annual Fund Operating Expenses (excluding interest, taxes, brokerage commissions, other expenses which are capitalized in accordance with generally accepted accounting principles, extraordinary expenses, dividend expense on short sales, 12b-1 fees, and acquired fund fees and expenses) at 1.45% of the Fund’s average daily net assets through February 28, 2017. This expense cap may not be terminated prior to this date except by the Board.
Total Return(a) (For the periods ended April 30, 2016) | ||||||||||||||||
Three Months | Six Months | One Year | Since Inception (April 28, 2015) | |||||||||||||
SMI Bond Fund | 1.60% | 0.91% | -0.93% | -0.92% | ||||||||||||
Barclays Capital U.S. Aggregate Bond Index(b) | 2.02% | 2.82% | 2.72% | 2.11% |
Total annual operating expense, as disclosed in the Fund’s prospectus dated February 29, 2016, were 1.15% of average daily net assets (4.48% before fee waivers/expense reimbursements by the Adviser). All expenses are reflected in performance results. The Fund’s adviser has contractually has agreed to waive its fee and/or reimburse expenses to the extent necessary to maintain Total Annual Fund Operating Expenses (excluding interest, taxes, brokerage commissions, other expenses which are capitalized in accordance with generally accepted accounting principles, extraordinary expenses, dividend expense on short sales, 12b-1 fees, and acquired fund fees and expenses) at 0.85% of the Fund’s average daily net assets through February 28, 2017. Each fee waiver or expense reimbursement 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 fee waiver or expense reimbursement. This expense cap may not be terminated prior to this date except by the Board.
6
PERFORMANCE RESULTS – (Unaudited), (Continued)
Total Return(a) (For the periods ended April 30, 2016) | ||||||||||||||||
Three Months | Six Months | One Year | Since Inception (April 29, 2015) | |||||||||||||
SMI 50/40/10 Fund | 3.42% | -0.96% | -7.40% | -8.84% | ||||||||||||
Wilshire 5000® Total Market Index(b) | 7.70% | 0.27% | 0.33% | -1.17% | ||||||||||||
Barclays Capital U.S. Aggregate Bond Index(b) | 2.02% | 2.82% | 2.72% | 2.37% | ||||||||||||
Custom Benchmark(c) | 5.44% | 1.39% | 1.52% | 0.47% |
Total annual operating expense, as disclosed in the Fund’s prospectus dated February 29, 2016, were 2.11% of average daily net assets (3.41% before fee waivers/expense reimbursements by the Adviser). All expenses are reflected in performance results. The Fund’s investment adviser has contractually has agreed to waive its fee and reimburse expenses to the extent necessary to maintain Total Annual Fund Operating Expenses (excluding interest, taxes, brokerage commissions, other expenses which are capitalized in accordance with generally accepted accounting principles, extraordinary expenses, dividend expense on short sales, 12b-1 fees, and acquired fund fees and expenses) at 1.45% of the Fund’s average daily net assets through February 28, 2017. 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 expense cap may not be terminated prior to this date except by the Board.
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. Current performance of the Sound Mind Investing Fund, SMI Conservative Allocation Fund, SMI Dynamic Allocation Fund, SMI Bond Fund and SMI 50/40/10 Fund (each a “Fund” and collectively the “Funds”) may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-877-764-3863.
(a) | Return figures reflect any change in price per share and assume the reinvestment of all distributions. The Funds’ 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 Standard & Poor’s 500® Index, Wilshire 5000® Total Market Index and Barclays Capital U.S. Aggregate Bond Index are unmanaged indices that assume reinvestment of all distributions and exclude the effect of taxes and fees. The Standard & Poor’s 500® Index, Wilshire 5000® Total Market Index and Barclays Capital U.S. Aggregate Bond Index are widely recognized unmanaged indices and are representative of a broader market and range of securities than is found in each Fund’s portfolio. The returns of the indices are not reduced by any fees or operating expenses. Individuals cannot invest directly in the 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) | The Custom Benchmark for the SMI Conservative Allocation Fund, SMI Dynamic Allocation Fund and SMI 50/40/10 Fund is comprised of 60% Wilshire 5000® Total Market Index and 40% Barclays Capital U.S. Aggregate Bond Index. |
The Funds’ investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the Funds and may be obtained by calling the same number as above. Please read it carefully before investing.
7
FUND HOLDINGS – (Unaudited)
(a) | As a percentage of investments. |
Sound Mind Investing Fund seeks long term capital appreciation. The Fund seeks to achieve its objective by investing in a diversified portfolio of other investment companies using a “fund upgrading” strategy. The fund upgrading investment strategy is a systematic investment approach that is based on the belief of the Fund’s investment adviser that superior returns can be obtained by constantly monitoring the performance of a wide universe of other investment companies, and standing ready to move assets into the funds deemed by the adviser to be most attractive at the time of analysis.
8
FUND HOLDINGS – (Unaudited), (Continued)
(a) | As a percentage of investments. |
SMI Conservative Allocation Fund seeks total return. Total return is composed of both income and capital appreciation. The Fund invests in a portfolio of equities and fixed income securities, including securities of other investment companies that focus their investments on equity and fixed income investments. To the extent the Adviser invests the Fund’s assets in equity securities, such investments will consist of investments in other investment companies (i.e., mutual funds), exchange traded funds (“ETFs”) and pooled investment vehicles, and the Adviser will select such portfolio holdings. The fixed income portion (if any) of the Fund will be comprised of fixed income investment companies and ETFs and individual fixed income securities. The Adviser will use its proprietary “Bond Upgrading” strategy to make all portfolio decisions with respect to investments in fixed income investment companies and ETFs. The Adviser’s “Bond Upgrading” strategy involves the use of momentum based performance indicators of the various bond categories to identify which categories may present the best investment opportunities. The Adviser scores the categories and uses the scores to make decisions on investments in the various categories.
9
FUND HOLDINGS – (Unaudited), (Continued)
(a) | As a percentage of investments. |
SMI Dynamic Allocation Fund seeks total return. Total return is composed of both income and capital appreciation. The Fund uses a dynamic asset allocation investment strategy to achieve its investment objective. This is done by investing in securities from the following six asset classes – U.S. Equities, International Equities, Fixed Income Securities, Real Estate, Precious Metals, and Cash.
10
FUND HOLDINGS – (Unaudited), (Continued)
(a) | As a percentage of investments. |
SMI Bond Fund seeks total return. Total return is composed of both income and capital appreciation. The Fund invests at least 80% of its net assets in a portfolio of fixed income securities, including securities of other investment companies that focus their investments on fixed income investments. The Fund will be comprised of fixed income investment companies and ETFs and individual fixed income securities. The Adviser will use its proprietary “Bond Upgrading” strategy to make all portfolio decisions with respect to investments in fixed income investment companies and ETFs. The Adviser’s “Bond Upgrading” strategy involves the use of momentum based performance indicators of the various bond categories to identify which categories may present the best investment opportunities. The Adviser scores the categories and uses the scores to make decisions on investments in the various categories.
11
FUND HOLDINGS – (Unaudited), (Continued)
(a) | As a percentage of investments. |
SMI 50/40/10 Fund seeks total return. Total return is composed of both income and capital appreciation. The Fund’s investment adviser, allocates the Fund’s assets on a 50/40/10 basis among various investment strategies as follows:
• | 50% – Dynamic Asset Allocation Strategy |
• | 40% – Fund Upgrading Strategy |
• | 10% – Sector Rotation Strategy |
The Sector Rotation Strategy involves the Adviser selecting from a universe of mutual funds and ETFs it has compiled using proprietary methods. This universe is specifically designed by the Adviser to balance exposure to a wide variety of market sectors and industries. This universe includes both leveraged and non-leveraged funds. The Adviser ranks these funds based on their recent performance across multiple short-term performance periods, then uses an upgrading approach to invest in the top performing market sector or sectors. Once a particular sector or sectors is identified, the Adviser purchases one or more mutual funds or ETFs to gain the desired exposure to that particular sector. This portion of the Fund may be concentrated, meaning that the Fund may be invested in as few as one or two sectors at a time and potentially as few as one underlying mutual fund or ETF.
Availability of Portfolio Schedule – (Unaudited)
Each 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 Funds’ Forms N-Q are available at the SEC’s website at www.sec.gov. The Funds’ 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.
12
SUMMARY OF FUNDS’ EXPENSES – (Unaudited)
As a shareholder of one of the Funds, 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 each Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
Each Fund’s example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from November 1, 2015 through April 30, 2016.
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 Period” 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 each Funds’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds’ 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 Funds 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.
Expenses shown are meant to highlight your ongoing costs only and do not reflect any transactional costs such as the fee imposed on short-term redemptions. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
Sound Mind | Beginning Account Value November 1, 2015 | Ending Account Value April 30, 2016 | Expenses Paid During Period November 1, 2015 – April 30, 2016 (a) | |||||||||
Actual | $ | 1,000.00 | $ | 979.20 | $ | 5.72 | ||||||
Hypothetical (b) | $ | 1,000.00 | $ | 1,019.09 | $ | 5.83 |
(a) | Expenses are equal to the Fund’s annualized expense ratio of 1.16%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the partial year period). |
(b) | Assumes a 5% return before expenses. |
13
SUMMARY OF FUNDS’ EXPENSES – (Unaudited), (Continued)
SMI | Beginning Account Value November 1, 2015 | Ending Account Value April 30, 2016 | Expenses Paid During Period November 1, 2015 – April 30, 2016 (a) | |||||||||
Actual | $ | 1,000.00 | $ | 998.00 | $ | 5.76 | ||||||
Hypothetical (b) | $ | 1,000.00 | $ | 1,019.09 | $ | 5.83 |
(a) | Expenses are equal to the Fund’s annualized expense ratio of 1.16%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the partial year period). |
(b) | Assumes a 5% return before expenses. |
SMI | Beginning Account Value November 1, 2015 | Ending Account Value April 30, 2016 | Expenses Paid During Period November 1, 2015 – April 30, 2016 (a) | |||||||||
Actual | $ | 1,000.00 | $ | 994.20 | $ | 5.75 | ||||||
Hypothetical (b) | $ | 1,000.00 | $ | 1,019.09 | $ | 5.83 |
(a) | Expenses are equal to the Fund’s annualized expense ratio of 1.16%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the partial year period). |
(b) | Assumes a 5% return before expenses. |
SMI Bond Fund | Beginning Account Value November 1, 2015 | Ending Account Value April 30, 2016 | Expenses Paid During Period November 1, 2015 – April 30, 2016 (a) | |||||||||
Actual | $ | 1,000.00 | $ | 1,009.10 | $ | 4.27 | ||||||
Hypothetical (b) | $ | 1,000.00 | $ | 1,020.62 | $ | 4.29 |
(a) | Expenses are equal to the Fund’s annualized expense ratio of 0.85%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the partial year period). |
(b) | Assumes a 5% return before expenses. |
SMI 50/40/10 Fund | Beginning Account Value November 1, 2015 | Ending Account Value April 30, 2016 | Expenses Paid During Period November 1, 2015 – April 30, 2016 (a) | |||||||||
Actual | $ | 1,000.00 | $ | 990.40 | $ | 7.23 | ||||||
Hypothetical (b) | $ | 1,000.00 | $ | 1,017.59 | $ | 7.33 |
(a) | Expenses are equal to the Fund’s annualized expense ratio of 1.46%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the partial year period). |
(b) | Assumes a 5% return before expenses. |
14
SOUND MIND INVESTING FUND
SCHEDULE OF INVESTMENTS
April 30, 2016 – (Unaudited)
Mutual Funds 73.36% | Shares | Fair Value | ||||||
Mutual Funds Greater Than 1% of The Sound | ||||||||
AB Large Cap Growth Fund – Advisor Class | 204,761 | $ | 8,159,743 | |||||
Aegis Value Fund, Inc. (a) | 178,552 | 2,719,344 | ||||||
Akre Focus Fund – Institutional Class * | 330,254 | 7,926,090 | ||||||
AQR Large Cap Defensive Style Fund – Class N | 180,718 | 2,725,229 | ||||||
Champlain Mid Cap Fund – Institutional Class | 242,637 | 3,464,851 | ||||||
Delaware Smid Cap Growth Fund – Institutional Class | 102,044 | 3,351,122 | ||||||
Fidelity Small Cap Value Fund | 432,756 | 7,612,184 | ||||||
Hennessy Focus Fund – Institutional Class | 85,809 | 6,180,799 | ||||||
Jensen Quality Growth Fund – Institutional Class | 215,816 | 8,289,482 | ||||||
Lazard Global Listed Infrastructure Portfolio – Institutional Class | 1,069,896 | 15,160,426 | ||||||
Lazard U.S. Equity Concentrated Portfolio – Institutional Class | 750,708 | 10,427,329 | ||||||
Loomis Sayles Growth Fund – Class Y | 738,829 | 8,533,471 | ||||||
Mairs & Power Growth Fund – Investor Class | 45,686 | 5,199,098 | ||||||
Oppenheimer International Small-Mid Company Fund – Class Y | 388,028 | 14,209,585 | ||||||
Polen Growth Fund – Institutional Class (a) | 711,001 | 13,452,141 | ||||||
T. Rowe Price Mid-Cap Growth Fund | 83,769 | 6,139,438 | ||||||
Value Line Small Cap Opportunities Fund – Investor Class | 49,422 | 2,083,623 | ||||||
Victory Sycamore Established Value Fund – Institutional Class | 194,051 | 6,225,154 | ||||||
Virtus Foreign Opportunities Fund – Institutional Class | 73,540 | 2,119,423 | ||||||
Virtus Small-Cap Core Fund – Institutional Class (a) | 172,974 | 3,935,148 | ||||||
Virtus Small-Cap Sustainable Growth Fund – Institutional Class (a) | 275,812 | 5,019,780 | ||||||
Wasatch International Growth Fund – Investor Class * | 226,835 | 6,578,215 | ||||||
|
| |||||||
TOTAL MUTUAL FUNDS GREATER THAN 1% OF THE SOUND |
| 149,511,675 | ||||||
|
| |||||||
Mutual Funds Less Than 1% of The Sound | ||||||||
Allianz NFJ Dividend Value Fund – Institutional Class | 200 | 3,190 | ||||||
Allianz NFJ Small-Cap Value Fund – Institutional Class | 162 | 3,695 | ||||||
American Century International Discovery Fund – Institutional Class | 250 | 3,166 | ||||||
Artisan International Small Cap Fund – Investor Class | 150 | 3,450 | ||||||
Artisan International Value Fund – Investor Class | 150 | 4,846 | ||||||
Artisan Mid Cap Value Fund – Investor Class | 200 | 4,106 | ||||||
Artisan Small Cap Fund – Investor Class | 250 | 6,360 | ||||||
Artisan Small Cap Value Fund – Investor Class | 150 | 1,631 | ||||||
Artisan Value Fund – Advisor Class | 153,660 | 1,899,232 |
See accompanying notes which are an integral part of these financial statements.
15
SOUND MIND INVESTING FUND
SCHEDULE OF INVESTMENTS
April 30, 2016 – (Unaudited), (Continued)
Mutual Funds 73.36% – continued | Shares | Fair Value | ||||||
Mutual Funds Less Than 1% of The Sound | ||||||||
Aston/TAMRO Small Cap Fund – Institutional Class | 100 | $ | 636 | |||||
BBH Core Select Fund – Class N | 100 | 2,094 | ||||||
Berwyn Fund | 100 | 2,753 | ||||||
BlackRock International Opportunities Portfolio – Institutional Class | 100 | 3,166 | ||||||
Bridgeway Small-Cap Growth Fund – Class N | 205 | 4,140 | ||||||
Bridgeway Small-Cap Value Fund – Class N | 179 | 3,656 | ||||||
Buffalo Small Cap Fund, Inc. | 150 | 2,496 | ||||||
Columbia Acorn International – Class Z | 100 | 3,936 | ||||||
Columbia Acorn Select – Class Z | 150 | 2,247 | ||||||
Columbia Small Cap Growth Fund I – Class Z | 100 | 1,663 | ||||||
Columbia Value and Restructuring Fund – Class Z | 50 | 2,045 | ||||||
Davis Opportunity Fund – Class Y | 100 | 3,019 | ||||||
Delaware Select Growth Fund – Institutional Class | 100 | 3,844 | ||||||
Delaware Small Cap Value Fund – Institutional Class | 100 | 5,116 | ||||||
Delaware Value Fund – Institutional Class | 144 | 2,654 | ||||||
Deutsche Small Cap Value Fund – Institutional Class | 85 | 1,900 | ||||||
DFA International Small Cap Value Portfolio – Investor Class | 100 | 1,908 | ||||||
DFA International Small Company Portfolio – Institutional Class | 100 | 1,760 | ||||||
DFA US Small Cap Value Portfolio – Institutional Class | 100 | 3,163 | ||||||
Dreyfus Opportunistic Small Cap Fund | 100 | 2,825 | ||||||
Fairholme Fund | 100 | 1,862 | ||||||
Fidelity Mid-Cap Stock Fund | 150 | 5,110 | ||||||
Fidelity Small Cap Discovery Fund | 100 | 2,781 | ||||||
Fidelity Small Cap Stock Fund | 150 | 2,622 | ||||||
Franklin Small Cap Value Fund – Advisor Class | 100 | 4,943 | ||||||
Hartford International Opportunities Fund/The – Class Y | 248 | 3,690 | ||||||
Heartland Value Fund | 100 | 3,605 | ||||||
Hennessy Focus Fund – Investor Class | 100 | 7,062 | ||||||
Hotchkis and Wiley Mid-Cap Value Fund – Institutional Class | 100 | 3,267 | ||||||
Invesco American Value Fund – Class R5 | 100 | 3,429 | ||||||
Janus Overseas Fund – Class T | 100 | 2,522 | ||||||
Janus Venture Fund – Class T | 100 | 6,011 | ||||||
JOHCM International Select Fund – Institutional Class (c) | 100 | 1,841 | ||||||
JPMorgan Disciplined Equity Fund – Institutional Class | 100 | 2,177 | ||||||
JPMorgan Mid Cap Value Fund – Institutional Class | 100 | 3,550 | ||||||
JPMorgan Small Cap Equity Fund – Select Class | 226 | 10,447 |
See accompanying notes which are an integral part of these financial statements.
16
SOUND MIND INVESTING FUND
SCHEDULE OF INVESTMENTS
April 30, 2016 – (Unaudited), (Continued)
Mutual Funds 73.36% – continued | Shares | Fair Value | ||||||
Mutual Funds Less Than 1% of The Sound | ||||||||
Legg Mason Opportunity Trust – Institutional Class * | 100 | $ | 1,799 | |||||
Longleaf Partners Fund | 150 | 3,511 | ||||||
Longleaf Partners International Fund | 100 | 1,303 | ||||||
Longleaf Partners Small-Cap Fund | 100 | 3,010 | ||||||
Lord Abbett Developing Growth Fund, Inc. – Institutional Class | 100 | 1,873 | ||||||
Morgan Stanley Institutional Fund, Inc. – Growth Portfolio – Institutional Class (c) | 100 | 3,788 | ||||||
Neuberger Berman Genesis Fund – Institutional Class | 100 | 5,215 | ||||||
Nicholas Fund, Inc. | 50 | 3,132 | ||||||
Oakmark International Fund – Institutional Class | 150 | 3,176 | ||||||
Oakmark International Small Cap Fund – Institutional Class | 150 | 2,169 | ||||||
Oakmark Select Fund – Institutional Class | 150 | 5,697 | ||||||
Oppenheimer Mid Cap Value Fund – Class Y | 100 | 4,798 | ||||||
Perkins Mid Cap Value Fund – Class T | 200 | 3,198 | ||||||
PRIMECAP Odyssey Aggressive Growth Fund | 100 | 3,096 | ||||||
Principal SmallCap Growth Fund I – Institutional Class | 200 | 2,102 | ||||||
Royce Low-Priced Stock Fund – Investment Class | 150 | 1,166 | ||||||
Royce Opportunity Fund – Investor Class | 151 | 1,673 | ||||||
Royce Premier Fund – Investment Class | 300 | 4,569 | ||||||
Royce Small-Cap Value Fund – Institutional Class | 100 | 929 | ||||||
Royce Special Equity Fund – Investment Class | 100 | 1,899 | ||||||
Royce Special Equity Fund – Institutional Class | 150 | 2,828 | ||||||
RS Small Cap Growth Fund – Class Y | 100 | 5,943 | ||||||
T. Rowe Price International Discovery Fund | 150 | 7,999 | ||||||
T. Rowe Price New Horizons Fund | 100 | 4,117 | ||||||
T. Rowe Price Small-Cap Value Fund | 100 | 3,792 | ||||||
Third Avenue Value Fund – Institutional Class | 335 | 16,742 | ||||||
Thornburg Value Fund – Institutional Class | 100 | 5,223 | ||||||
TIAA-CREF International Equity Fund – Institutional Class | 100 | 1,053 | ||||||
Touchstone Sands Capital Select Growth Fund – Class Y | 100 | 1,534 | ||||||
Tweedy Browne Global Value Fund | 150 | 3,664 | ||||||
Vanguard Strategic Equity Fund – Investor Class | 100 | 2,837 | ||||||
Wasatch Emerging Markets Small Cap Fund | 1,000 | 2,450 | ||||||
|
| |||||||
TOTAL MUTUAL FUNDS LESS THAN 1% OF THE SOUND |
| 2,165,901 | ||||||
|
| |||||||
TOTAL MUTUAL FUNDS (Cost $153,458,593) | 151,677,576 | |||||||
|
|
See accompanying notes which are an integral part of these financial statements.
17
SOUND MIND INVESTING FUND
SCHEDULE OF INVESTMENTS
April 30, 2016 – (Unaudited), (Continued)
Exchange-Traded Funds 26.29% | Shares | Fair Value | ||||||
Consumer Staples Select Sector SPDR Fund | 162,200 | $ | 8,483,060 | |||||
iShares MSCI USA Minimum Volatility ETF | 195,300 | 8,548,281 | ||||||
iShares Select Dividend ETF | 68,100 | 5,586,924 | ||||||
PowerShares High Yield Equity Dividend Achievers Portfolio (a) | 1,275,500 | 19,011,327 | ||||||
PowerShares S&P 500 High Dividend Low Volatility Portfolio | 343,400 | 12,740,140 | ||||||
|
| |||||||
TOTAL EXCHANGE-TRADED FUNDS (Cost $51,181,418) | 54,369,732 | |||||||
|
| |||||||
Money Market Securities 0.97% | ||||||||
Fidelity Institutional Money Market Portfolio – Institutional Class, 0.37% (d) | 2,008,714 | 2,008,714 | ||||||
|
| |||||||
TOTAL MONEY MARKET SECURITIES (Cost $2,008,714) | 2,008,714 | |||||||
|
| |||||||
TOTAL INVESTMENTS – 100.62% (Cost $206,648,725) | $ | 208,056,022 | ||||||
|
| |||||||
Liabilities in Excess of Other Assets – (0.62)% | (1,284,848 | ) | ||||||
|
| |||||||
NET ASSETS – 100.00% | $ | 206,771,174 | ||||||
|
|
(a) | A portion of this security may be deemed illiquid due to the Investment Company Act of 1940, as amended (the “1940 Act”) provision stating that no issuer of any investment company security purchased or acquired by a registered investment company shall be obligated to redeem such security in an amount exceeding 1 per centum of such issuer’s total outstanding shares during any period of less than thirty days. As of April 30, 2016, the fair value of illiquid securities held by the Fund was $21,031,472 or 10.17% of net assets. |
(b) | Small investments are occasionally retained in mutual funds that are closed to new investment, or in the manager’s opinion are at risk to close, so as to allow the Fund the flexibility to reinvest in these funds in the future. |
(c) | Security is fair valued by the Adviser. |
(d) | Rate disclosed is the seven day yield as of April 30, 2016. |
* | Non-income producing security. |
ETF | – Exchange-Traded Fund |
SPDR | – Standard & Poor’s Depositary Receipts |
See accompanying notes which are an integral part of these financial statements.
18
SMI CONSERVATIVE ALLOCATION FUND
SCHEDULE OF INVESTMENTS
April 30, 2016 – (Unaudited)
Exchange-Traded Funds – 69.26% | Shares | Fair Value | ||||||
iShares 20+ Year Treasury Bond ETF | 15,350 | $ | 1,985,983 | |||||
iShares iBoxx $ Investment Grade Corporate Bond ETF | 13,100 | 1,576,323 | ||||||
PowerShares DB Gold Fund ETF (a)* | 96,100 | 4,065,030 | ||||||
Vanguard Intermediate-Term Bond ETF | 4,250 | 366,945 | ||||||
Vanguard Long-Term Corporate Bond ETF | 20,500 | 1,869,805 | ||||||
Vanguard REIT ETF | 45,500 | 3,723,265 | ||||||
|
| |||||||
TOTAL EXCHANGE-TRADED FUNDS (Cost $13,288,801) | 13,587,351 | |||||||
|
| |||||||
Mutual Funds – 30.26% | ||||||||
Scout Core Plus Bond Fund – Institutional Class | 60,563 | 1,975,561 | ||||||
Vanguard Intermediate-Term Bond Index Fund – Admiral Class | 339,349 | 3,960,200 | ||||||
|
| |||||||
TOTAL MUTUAL FUNDS (Cost $5,886,764) | 5,935,761 | |||||||
|
| |||||||
Money Market Securities – 0.51% | ||||||||
Fidelity Institutional Money Market Portfolio – Institutional Class, 0.37% (b) | 99,290 | 99,290 | ||||||
|
| |||||||
TOTAL MONEY MARKET SECURITIES (Cost $99,290) | 99,290 | |||||||
|
| |||||||
TOTAL INVESTMENTS – 100.03% (Cost $19,274,855) | $ | 19,622,402 | ||||||
|
| |||||||
Liabilities in Excess of Other Assets – (0.03)% | (6,038 | ) | ||||||
|
| |||||||
NET ASSETS – 100.00% | $ | 19,616,364 | ||||||
|
|
(a) | A portion of this security may be deemed illiquid due to the 1940 Act provision stating that no issuer of any investment company security purchased or acquired by a registered investment company shall be obligated to redeem such security in an amount exceeding 1 per centum of such issuer’s total outstanding shares during any period of less than thirty days. As of April 30, 2016, the fair value of illiquid securities held by the Fund was $1,693,339 or 8.63% of net assets. |
(b) | Rate disclosed is the seven day yield as of April 30, 2016. |
* | Non-income producing security. |
ETF | – Exchange-Traded Fund |
REIT | – Real Estate Investment Trust |
See accompanying notes which are an integral part of these financial statements.
19
SMI DYNAMIC ALLOCATION FUND
SCHEDULE OF INVESTMENTS
April 30, 2016 – (Unaudited)
Exchange-Traded Funds – 92.63% | Shares | Fair Value | ||||||
iShares 20+ Year Treasury Bond ETF | 250,900 | $ | 32,461,442 | |||||
iShares iBoxx $ Investment Grade Corporate Bond ETF | 132,700 | 15,967,791 | ||||||
PowerShares DB Gold Fund ETF (a)(b)* | 1,115,000 | 47,164,500 | ||||||
Vanguard Intermediate-Term Bond ETF | 93,700 | 8,090,058 | ||||||
Vanguard REIT ETF (a) | 737,200 | 60,325,076 | ||||||
Vanguard Short-Term Bond ETF | 98,000 | 7,899,780 | ||||||
|
| |||||||
TOTAL EXCHANGE-TRADED FUNDS (Cost $168,229,372) | 171,908,647 | |||||||
|
| |||||||
Mutual Funds – 4.24% | ||||||||
First Eagle Gold Fund – Institutional Class * | 423,575 | 7,865,781 | ||||||
|
| |||||||
TOTAL MUTUAL FUNDS (Cost $6,300,000) | 7,865,781 | |||||||
|
| |||||||
Money Market Securities – 3.17% | ||||||||
Fidelity Institutional Money Market Portfolio – Institutional Class, 0.37% (c) | 5,875,081 | 5,875,081 | ||||||
|
| |||||||
TOTAL MONEY MARKET SECURITIES (Cost $5,875,081) | 5,875,081 | |||||||
|
| |||||||
TOTAL INVESTMENTS – 100.04% (Cost $180,404,453) | $ | 185,649,509 | ||||||
|
| |||||||
Liabilities in Excess of Other Assets – (0.04)% | (69,816 | ) | ||||||
|
| |||||||
NET ASSETS – 100.00% | $ | 185,579,693 | ||||||
|
|
(a) | For a schedule of the Fund’s holdings please refer to the Fund’s most recent semi-annual or annual report filed at www.sec.gov. |
(b) | A portion of this security may be deemed illiquid due to the 1940 Act provision stating that no issuer of any investment company security purchased or acquired by a registered investment company shall be obligated to redeem such security in an amount exceeding 1 per centum of such issuer’s total outstanding shares during any period of less than thirty days. As of April 30, 2016, the fair value of illiquid securities held by the Fund was $44,792,809 or 24.14% of net assets. |
(c) | Rate disclosed is the seven day yield as of April 30, 2016. |
* | Non-income producing security. |
ETF | – Exchange-Traded Fund |
REIT | – Real Estate Investment Trust |
See accompanying notes which are an integral part of these financial statements.
20
SMI BOND FUND
SCHEDULE OF INVESTMENTS
April 30, 2016 – (Unaudited)
Exchange-Traded Funds – 23.14% | Shares | Fair Value | ||||||
Vanguard Long-Term Corporate Bond ETF | 20,900 | $ | 1,906,289 | |||||
|
| |||||||
TOTAL EXCHANGE-TRADED FUNDS (Cost $1,905,983) | 1,906,289 | |||||||
|
| |||||||
Mutual Funds – 73.65% | ||||||||
Scout Core Plus Bond Fund – Institutional Class (a) | 63,308 | 2,065,115 | ||||||
Vanguard Intermediate-Term Bond Index Fund – Admiral Class (a) | 342,884 | 4,001,456 | ||||||
|
| |||||||
TOTAL MUTUAL FUNDS (Cost $6,012,570) | 6,066,571 | |||||||
|
| |||||||
Money Market Securities – 0.31% | ||||||||
Fidelity Institutional Money Market Portfolio – Institutional Class, 0.37% (b) | 25,182 | 25,182 | ||||||
|
| |||||||
TOTAL MONEY MARKET SECURITIES (Cost $25,182) | 25,182 | |||||||
|
| |||||||
TOTAL INVESTMENTS – 97.10% (Cost $7,943,735) | $ | 7,998,042 | ||||||
|
| |||||||
Other Assets in Excess of Liabilities – 2.90% | 239,065 | |||||||
|
| |||||||
NET ASSETS – 100.00% | $ | 8,237,107 | ||||||
|
|
(a) | For a schedule of the Fund’s holdings please refer to the Fund’s most recent semi-annual or annual report filed at www.sec.gov. |
(b) | Rate disclosed is the seven day yield as of April 30, 2016. |
ETF | – Exchange-Traded Fund |
See accompanying notes which are an integral part of these financial statements.
21
SMI 50/40/10 FUND
SCHEDULE OF INVESTMENTS
April 30, 2016 – (Unaudited)
Exchange-Traded Funds – 57.57% | Shares | Fair Value | ||||||
iShares 20+ Year Treasury Bond ETF | 10,650 | $ | 1,377,897 | |||||
iShares iBoxx $ Investment Grade Corporate Bond ETF | 11,650 | 1,401,844 | ||||||
PowerShares DB Gold Fund ETF (a)* | 67,600 | 2,859,480 | ||||||
PowerShares High Yield Equity Dividend Achievers Portfolio | 49,100 | 731,836 | ||||||
PowerShares S&P 500 High Dividend Low Volatility Portfolio | 23,800 | 882,980 | ||||||
Vanguard REIT ETF | 33,300 | 2,724,939 | ||||||
|
| |||||||
TOTAL EXCHANGE-TRADED FUNDS (Cost $9,685,991) | 9,978,976 | |||||||
|
| |||||||
Common Stocks – 5.60% | ||||||||
Telecommunication Services – 5.60% | ||||||||
AT&T, Inc. | 12,800 | 496,896 | ||||||
Verizon Communications, Inc. | 9,300 | 473,742 | ||||||
|
| |||||||
TOTAL COMMON STOCKS (Cost $1,001,455) | 970,638 | |||||||
|
| |||||||
Mutual Funds – 33.03% | ||||||||
Aegis Value Fund, Inc. | 36,850 | 561,227 | ||||||
Akre Focus Fund – Institutional Class * | 7,564 | 181,540 | ||||||
Artisan Value Fund – Advisor Class | 52,886 | 653,677 | ||||||
Champlain Mid Cap Fund – Institutional Class | 26,261 | 375,000 | ||||||
Lazard Global Listed Infrastructure Portfolio – Institutional Class | 44,051 | 624,204 | ||||||
Lazard U.S. Equity Concentrated Portfolio – Institutional Class | 29,381 | 408,104 | ||||||
Loomis Sayles Growth Fund – Class Y | 59,918 | 692,051 | ||||||
Oppenheimer International Small-Mid Company Fund – Class Y | 8,147 | 298,361 | ||||||
Polen Growth Fund – Institutional Class | 25,486 | 482,190 | ||||||
ProFunds Telecommunications UltraSector ProFund – Investor Class (a) | 27,899 | 661,203 | ||||||
Virtus Small-Cap Sustainable Growth Fund – Institutional Class | 31,042 | 564,969 | ||||||
Wasatch International Growth Fund – Investor Class * | 7,671 | 222,471 | ||||||
|
| |||||||
TOTAL MUTUAL FUNDS (Cost $5,738,436) | 5,724,997 | |||||||
|
| |||||||
Money Market Securities – 1.14% | ||||||||
Fidelity Institutional Money Market Portfolio – Institutional Class, 0.37% (b) | 197,965 | 197,965 | ||||||
|
| |||||||
TOTAL MONEY MARKET SECURITIES (Cost $197,965) | 197,965 | |||||||
|
| |||||||
TOTAL INVESTMENTS – 97.34% (Cost $16,623,847) | $ | 16,872,576 | ||||||
|
| |||||||
Other Assets in Excess of Liabilities – 2.66% | 461,016 | |||||||
|
| |||||||
NET ASSETS – 100.00% | $ | 17,333,592 | ||||||
|
|
See accompanying notes which are an integral part of these financial statements.
22
SMI 50/40/10 FUND
SCHEDULE OF INVESTMENTS
April 30, 2016 – (Unaudited), (Continued)
(a) | A portion of this security may be deemed illiquid due to the 1940 Act provision stating that no issuer of any investment company security purchased or acquired by a registered investment company shall be obligated to redeem such security in an amount exceeding 1 per centum of such issuer’s total outstanding shares during any period of less than thirty days. As of April 30, 2016, the fair value of illiquid securities held by the Fund was $1,035,341 or 5.97% of net assets. |
(b) | Rate disclosed is the seven day yield as of April 30, 2016. |
* | Non-income producing security. |
ETF | – Exchange-Traded Fund |
REIT | – Real Estate Investment Trust |
The sectors shown on the schedule of investments are based on the 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 Ultimus Asset Services, LLC.
See accompanying notes which are an integral part of these financial statements.
23
SMI FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 2016 – (Unaudited)
Sound Mind Investing Fund | SMI Conservative Allocation Fund | SMI Dynamic Allocation Fund | ||||||||||
Assets | ||||||||||||
Investment in securities: | ||||||||||||
At cost | $ | 206,648,725 | $ | 19,274,855 | $ | 180,404,453 | ||||||
|
|
|
|
|
| |||||||
At fair value | $ | 208,056,022 | $ | 19,622,402 | $ | 185,649,509 | ||||||
Cash | — | 264 | — | |||||||||
Receivable for investments sold | 3,510,665 | 1,868,023 | — | |||||||||
Receivable for fund shares sold | 13,360 | 3,205 | 85,376 | |||||||||
Dividend receivable | 574 | 8,735 | 4,699 | |||||||||
Prepaid expenses | 31,770 | 18,583 | 35,266 | |||||||||
|
|
|
|
|
| |||||||
Total Assets | 211,612,391 | 21,521,212 | 185,774,850 | |||||||||
|
|
|
|
|
| |||||||
Liabilities | ||||||||||||
Payable for investments purchased | 4,517,334 | 1,869,710 | — | |||||||||
Payable for fund shares redeemed | 127,432 | 5,000 | 22,070 | |||||||||
Payable to Adviser | 170,409 | 9,416 | 151,540 | |||||||||
Payable to administrator, fund accountant, and transfer agent | 12,265 | 2,655 | 8,483 | |||||||||
Payable to custodian | 4,192 | 1,193 | 2,071 | |||||||||
Payable to trustees | 638 | — | 507 | |||||||||
Other accrued expenses | 8,947 | 16,874 | 10,486 | |||||||||
|
|
|
|
|
| |||||||
Total Liabilities | 4,841,217 | 1,904,848 | 195,157 | |||||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 206,771,174 | $ | 19,616,364 | $ | 185,579,693 | ||||||
|
|
|
|
|
| |||||||
Net Assets consist of: | ||||||||||||
Paid-in capital | $ | 211,386,638 | $ | 20,245,138 | $ | 192,723,087 | ||||||
Accumulated undistributed net investment (loss) | (1,057,635 | ) | (5,826 | ) | (254,396 | ) | ||||||
Accumulated undistributed net realized loss from investment transactions | (4,965,126 | ) | (970,495 | ) | (12,134,054 | ) | ||||||
Net unrealized appreciation on investment securities | 1,407,297 | 347,547 | 5,245,056 | |||||||||
|
|
|
|
|
| |||||||
Net Assets | $ | 206,771,174 | $ | 19,616,364 | $ | 185,579,693 | ||||||
|
|
|
|
|
| |||||||
Shares outstanding (unlimited number of shares authorized, no par value) | 20,614,072 | 2,101,755 | 17,196,156 | |||||||||
|
|
|
|
|
| |||||||
Net asset value (“NAV”) and offering price per share | $ | 10.03 | $ | 9.33 | $ | 10.79 | ||||||
|
|
|
|
|
| |||||||
Redemption price per share (NAV * 98%) (a) | $ | 9.83 | $ | 9.14 | $ | 10.57 | ||||||
|
|
|
|
|
|
(a) | The Funds charge a 2% redemption fee on shares redeemed within 60 days of purchase. Shares are redeemed at the NAV if held longer than 60 days. |
See accompanying notes which are an integral part of these financial statements.
24
SMI FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 2016 – (Unaudited), (Continued)
SMI Bond Fund | SMI 50/40/10 Fund | |||||||
Assets | ||||||||
Investment in securities: | ||||||||
At cost | $ | 7,943,735 | $ | 16,623,847 | ||||
|
|
|
| |||||
At fair value | $ | 7,998,042 | $ | 16,872,576 | ||||
Cash | 2,484 | — | ||||||
Receivable for investments sold | 1,932,588 | 583,508 | ||||||
Receivable for fund shares sold | 188,879 | 535,476 | ||||||
Dividend receivable | 8,797 | 11,612 | ||||||
Receivable from Adviser | 4,786 | — | ||||||
Prepaid expenses | 25,295 | 26,851 | ||||||
|
|
|
| |||||
Total Assets | 10,160,871 | 18,030,023 | ||||||
|
|
|
| |||||
Liabilities | ||||||||
Payable for investments purchased | 1,905,983 | 672,561 | ||||||
Payable for fund shares redeemed | 2,161 | — | ||||||
Payable for distributions to shareholders | 109 | — | ||||||
Payable to Adviser | — | 7,702 | ||||||
Payable to administrator, fund accountant, and transfer agent | 884 | 798 | ||||||
Payable to custodian | 595 | 538 | ||||||
Other accrued expenses | 14,032 | 14,832 | ||||||
|
|
|
| |||||
Total Liabilities | 1,923,764 | 696,431 | ||||||
|
|
|
| |||||
Net Assets | $ | 8,237,107 | $ | 17,333,592 | ||||
|
|
|
| |||||
Net Assets consist of: | ||||||||
Paid-in capital | $ | 8,311,781 | $ | 18,391,224 | ||||
Accumulated undistributed net investment (loss) | (17,899 | ) | (52,513 | ) | ||||
Accumulated undistributed net realized loss from investment transactions | (111,082 | ) | (1,253,848 | ) | ||||
Net unrealized appreciation on investment securities | 54,307 | 248,729 | ||||||
|
|
|
| |||||
Net Assets | $ | 8,237,107 | $ | 17,333,592 | ||||
|
|
|
| |||||
Shares outstanding (unlimited number of shares authorized, no par value) | 841,974 | 1,913,546 | ||||||
|
|
|
| |||||
Net asset value (“NAV”) and offering price per share | $ | 9.78 | $ | 9.06 | ||||
|
|
|
| |||||
Redemption price per share (NAV * 98%) (a) | $ | 9.58 | $ | 8.88 | ||||
|
|
|
|
(a) | The Funds charge a 2% redemption fee on shares redeemed within 60 days of purchase. Shares are redeemed at the NAV if held longer than 60 days. |
See accompanying notes which are an integral part of these financial statements.
25
SMI FUNDS
STATEMENTS OF OPERATIONS
For the Period Ended April 30, 2016 – (Unaudited)
Sound Mind Investing Fund | SMI Conservative Allocation Fund | SMI Dynamic Allocation Fund | ||||||||||
Investment Income | ||||||||||||
Dividend income | $ | 1,491,139 | $ | 252,951 | $ | 2,136,154 | ||||||
|
|
|
|
|
| |||||||
Total investment income | 1,491,139 | 252,951 | 2,136,154 | |||||||||
|
|
|
|
|
| |||||||
Expenses | ||||||||||||
Investment Adviser | 1,047,573 | 91,214 | 930,646 | |||||||||
Administration | 24,480 | 2,412 | 21,661 | |||||||||
Fund accounting | 14,154 | 1,394 | 12,521 | |||||||||
Transfer agent | 30,038 | 8,281 | 16,672 | |||||||||
Custodian | 10,718 | 3,314 | 5,471 | |||||||||
Chief Compliance Officer | 5,371 | 5,371 | 5,371 | |||||||||
Trustee | 4,783 | 2,241 | 4,453 | |||||||||
Legal | 12,033 | 9,139 | 11,286 | |||||||||
Audit | 7,763 | 8,922 | 7,763 | |||||||||
Printing | 19,040 | 1,643 | 16,085 | |||||||||
Registration | 16,215 | 16,897 | 26,316 | |||||||||
Miscellaneous | 19,844 | 11,403 | 16,049 | |||||||||
Line of credit | 3,466 | 355 | 3,080 | |||||||||
Interest expense | — | 492 | 1,266 | |||||||||
|
|
|
|
|
| |||||||
Total expenses | 1,215,478 | 163,078 | 1,078,640 | |||||||||
Fees waived by Adviser | — | (45,843 | ) | — | ||||||||
|
|
|
|
|
| |||||||
Net operating expenses | 1,215,478 | 117,235 | 1,078,640 | |||||||||
|
|
|
|
|
| |||||||
Net investment income | 275,661 | 135,716 | 1,057,514 | |||||||||
|
|
|
|
|
| |||||||
Net Realized and Unrealized Gain (Loss) on Investments | ||||||||||||
Long term capital gain dividends from investment companies | 8,706,899 | 15,711 | 28,483 | |||||||||
Net realized loss on investment transactions | (13,671,778 | ) | (325,887 | ) | (3,114,402 | ) | ||||||
Net change in unrealized appreciation (depreciation) on investments | (368,268 | ) | 115,491 | 886,006 | ||||||||
|
|
|
|
|
| |||||||
Net realized and unrealized gain (loss) on investments | (5,333,147 | ) | (194,685 | ) | (2,199,913 | ) | ||||||
|
|
|
|
|
| |||||||
Net increase (decrease) in net assets resulting from operations | $ | (5,057,486 | ) | $ | (58,969 | ) | $ | (1,142,399 | ) | |||
|
|
|
|
|
|
See accompanying notes which are an integral part of these financial statements.
26
SMI FUNDS
STATEMENTS OF OPERATIONS
For the Period Ended April 30, 2016 – (Unaudited), (Continued)
SMI Bond Fund | SMI 50/40/10 Fund | |||||||
Investment Income | ||||||||
Dividend income | $ | 100,000 | $ | 155,648 | ||||
|
|
|
| |||||
Total investment income | 100,000 | 155,648 | ||||||
|
|
|
| |||||
Expenses | ||||||||
Investment Adviser | 27,319 | 77,027 | ||||||
Administration | 839 | 1,522 | ||||||
Fund accounting | 478 | 877 | ||||||
Transfer agent | 4,416 | 6,210 | ||||||
Custodian | 1,390 | 1,412 | ||||||
Chief Compliance Officer | 5,371 | 5,371 | ||||||
Trustee | 2,079 | 2,160 | ||||||
Legal | 8,799 | 8,894 | ||||||
Audit | 8,589 | 8,589 | ||||||
Printing | 808 | 1,300 | ||||||
Registration | 6,359 | 7,048 | ||||||
Offering | 19,988 | 20,047 | ||||||
Miscellaneous | 5,151 | 6,698 | ||||||
Line of credit | 85 | 145 | ||||||
Interest expense | 32 | — | ||||||
|
|
|
| |||||
Total expenses | 91,703 | 147,300 | ||||||
Fees waived by Adviser | (58,763 | ) | (34,662 | ) | ||||
Fees voluntarily waived by the administrator | (1,833 | ) | — | |||||
|
|
|
| |||||
Net operating expenses | 31,107 | 112,638 | ||||||
|
|
|
| |||||
Net investment income | 68,893 | 43,010 | ||||||
|
|
|
| |||||
Net Realized and Unrealized Gain (Loss) on Investments | ||||||||
Long term capital gain dividends from investment companies | 11,219 | 197,503 | ||||||
Net realized loss on investment transactions | (94,965 | ) | (426,553 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | 97,449 | 44,289 | ||||||
|
|
|
| |||||
Net realized and unrealized gain (loss) on investments | 13,703 | (184,761 | ) | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | $ | 82,596 | $ | (141,751 | ) | |||
|
|
|
|
See accompanying notes which are an integral part of these financial statements.
27
SOUND MIND INVESTING FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended April 30, 2016 (Unaudited) | Year Ended October 31, 2015 | |||||||
Decrease in Net Assets due to: | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 275,661 | $ | (1,516,121 | ) | |||
Long term capital gain dividends from investment companies | 8,706,899 | 12,375,953 | ||||||
Net realized gain (loss) on investment transactions | (13,671,778 | ) | 18,464,087 | |||||
Net change in unrealized appreciation on investments | (368,268 | ) | (27,522,080 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | (5,057,486 | ) | 1,801,839 | |||||
|
|
|
| |||||
Distributions From: | ||||||||
Net investment income | — | (1,347,114 | ) | |||||
Net realized gains | (28,684,023 | ) | (43,665,598 | ) | ||||
|
|
|
| |||||
Total distributions | (28,684,023 | ) | (45,012,712 | ) | ||||
|
|
|
| |||||
Capital Transactions | ||||||||
Proceeds from shares sold | 8,361,909 | 20,805,833 | ||||||
Proceeds from redemption fees (a) | 4,108 | 8,051 | ||||||
Reinvestment of distributions | 27,898,432 | 44,074,918 | ||||||
Amount paid for shares redeemed | (23,091,054 | ) | (77,008,628 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from capital transactions | 13,173,395 | (12,119,826 | ) | |||||
|
|
|
| |||||
Total Decrease in Net Assets | (20,568,114 | ) | (55,330,699 | ) | ||||
|
|
|
| |||||
Net Assets | ||||||||
Beginning of period | 227,339,288 | 282,669,987 | ||||||
|
|
|
| |||||
End of period | $ | 206,771,174 | $ | 227,339,288 | ||||
|
|
|
| |||||
Accumulated net investment loss included in net assets at end of period | $ | (1,057,635 | ) | $ | (1,333,296 | ) | ||
|
|
|
| |||||
Share Transactions | ||||||||
Shares sold | 827,081 | 1,669,832 | ||||||
Shares issued in reinvestment of distributions | 2,727,119 | 3,648,586 | ||||||
Shares redeemed | (2,266,877 | ) | (6,270,705 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 1,287,323 | (952,287 | ) | |||||
|
|
|
|
(a) | The Fund charges a 2% redemption fee on shares redeemed within 60 days of purchase. Shares are redeemed at the NAV if held longer than 60 days. |
See accompanying notes which are an integral part of these financial statements.
28
SMI CONSERVATIVE ALLOCATION FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended April 30, 2016 (Unaudited) | Year Ended October 31, 2015 | |||||||
Decrease in Net Assets due to: | ||||||||
Operations | ||||||||
Net investment income | $ | 135,716 | $ | 221,588 | ||||
Long term capital gain dividends from investment companies | 15,711 | 711,659 | ||||||
Net realized loss on investment transactions and swap contracts | (325,887 | ) | (763,305 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments and swap contracts | 115,491 | (1,236,357 | ) | |||||
|
|
|
| |||||
Net decrease in net assets resulting from operations | (58,969 | ) | (1,066,415 | ) | ||||
|
|
|
| |||||
Distributions From: | ||||||||
Net investment income | (217,790 | ) | (234,212 | ) | ||||
Net realized gains | (438,679 | ) | (3,459,165 | ) | ||||
|
|
|
| |||||
Total distributions | (656,469 | ) | (3,693,377 | ) | ||||
|
|
|
| |||||
Capital Transactions | ||||||||
Proceeds from shares sold | 1,515,624 | 6,964,005 | ||||||
Proceeds from redemption fees (a) | 460 | 2,295 | ||||||
Reinvestment of distributions | 644,376 | 3,636,441 | ||||||
Amount paid for shares redeemed | (4,031,379 | ) | (14,246,135 | ) | ||||
|
|
|
| |||||
Net decrease in net assets resulting from capital transactions | (1,870,919 | ) | (3,643,394 | ) | ||||
|
|
|
| |||||
Total Decrease in Net Assets | (2,586,357 | ) | (8,403,186 | ) | ||||
|
|
|
| |||||
Net Assets | ||||||||
Beginning of period | 22,202,721 | 30,605,907 | ||||||
|
|
|
| |||||
End of period | $ | 19,616,364 | $ | 22,202,721 | ||||
|
|
|
| |||||
Accumulated net investment income (loss) included in net assets at end of period | $ | (5,826 | ) | $ | 76,248 | |||
|
|
|
| |||||
Share Transactions | ||||||||
Shares sold | 163,375 | 676,358 | ||||||
Shares issued in reinvestment of distributions | 69,512 | 353,052 | ||||||
Shares redeemed | (432,194 | ) | (1,385,789 | ) | ||||
|
|
|
| |||||
Net decrease in shares outstanding | (199,307 | ) | (356,379 | ) | ||||
|
|
|
|
(a) | The Fund charges a 2% redemption fee on shares redeemed within 60 days of purchase. Shares are redeemed at the NAV if held longer than 60 days. |
See accompanying notes which are an integral part of these financial statements.
29
SMI DYNAMIC ALLOCATION FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended April 30, 2016 (Unaudited) | Year Ended October 31, 2015 | |||||||
Increase (Decrease) in Net Assets due to: | ||||||||
Operations | ||||||||
Net investment income | $ | 1,057,514 | $ | 3,105,038 | ||||
Long term capital gain dividends from investment companies | 28,483 | 3,376 | ||||||
Net realized loss on investment transactions | (3,114,402 | ) | (9,671,547 | ) | ||||
Net change in unrealized appreciation on investments | 886,006 | (5,577,797 | ) | |||||
|
|
|
| |||||
Net decrease in net assets resulting from operations | (1,142,399 | ) | (12,140,930 | ) | ||||
|
|
|
| |||||
Distributions From: | ||||||||
Net investment income | (2,361,609 | ) | (3,044,696 | ) | ||||
Net realized gains | — | (1,173,745 | ) | |||||
|
|
|
| |||||
Total distributions | (2,361,609 | ) | (4,218,441 | ) | ||||
|
|
|
| |||||
Capital Transactions | ||||||||
Proceeds from shares sold | 11,460,026 | 97,034,317 | ||||||
Proceeds from redemption fees (a) | 3,183 | 8,043 | ||||||
Reinvestment of distributions | 2,304,657 | 4,160,062 | ||||||
Amount paid for shares redeemed | (22,223,096 | ) | (34,306,667 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from capital transactions | (8,455,230 | ) | 66,895,755 | |||||
|
|
|
| |||||
Total Increase (Decrease) in Net Assets | (11,959,238 | ) | 50,536,384 | |||||
|
|
|
| |||||
Net Assets | ||||||||
Beginning of period | 197,538,931 | 147,002,547 | ||||||
|
|
|
| |||||
End of period | $ | 185,579,693 | $ | 197,538,931 | ||||
|
|
|
| |||||
Accumulated net investment income (loss) included in net assets at end of period | $ | (254,396 | ) | $ | 1,049,699 | |||
|
|
|
| |||||
Share Transactions | ||||||||
Shares sold | 1,074,093 | 8,126,323 | ||||||
Shares issued in reinvestment of distributions | 212,607 | 346,672 | ||||||
Shares redeemed | (2,070,114 | ) | (2,940,748 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (783,414 | ) | 5,532,247 | |||||
|
|
|
|
(a) | The Fund charges a 2% redemption fee on shares redeemed within 60 days of purchase. Shares are redeemed at the NAV if held longer than 60 days. |
See accompanying notes which are an integral part of these financial statements.
30
SMI BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended April 30, 2016 (Unaudited) | For the Period Ended October 31, 2015 (a) | |||||||
Increase (Decrease) in Net Assets due to: | ||||||||
Operations | ||||||||
Net investment income | $ | 68,893 | $ | 2,420 | ||||
Long term capital gain dividends from investment companies | 11,219 | — | ||||||
Net realized loss on investment transactions | (94,965 | ) | (27,336 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | 97,449 | (43,142 | ) | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 82,596 | (68,058 | ) | |||||
|
|
|
| |||||
Distributions From: | ||||||||
Net investment income | (86,792 | ) | (2,960 | ) | ||||
|
|
|
| |||||
Total distributions | (86,792 | ) | (2,960 | ) | ||||
|
|
|
| |||||
Capital Transactions | ||||||||
Proceeds from shares sold | 2,226,209 | 7,595,456 | ||||||
Proceeds from redemption fees (b) | 357 | 676 | ||||||
Reinvestment of distributions | 85,570 | 2,894 | ||||||
Amount paid for shares redeemed | (825,085 | ) | (773,756 | ) | ||||
|
|
|
| |||||
Net increase in net assets resulting from capital transactions | 1,487,051 | 6,825,270 | ||||||
|
|
|
| |||||
Total Increase in Net Assets | 1,482,855 | 6,754,252 | ||||||
|
|
|
| |||||
Net Assets | ||||||||
Beginning of period | 6,754,252 | — | ||||||
|
|
|
| |||||
End of period | $ | 8,237,107 | $ | 6,754,252 | ||||
|
|
|
| |||||
Accumulated net investment loss included in net assets at end of period | $ | (17,899 | ) | $ | — | |||
|
|
|
| |||||
Share Transactions | ||||||||
Shares sold | 229,424 | 766,917 | ||||||
Shares issued in reinvestment of distributions | 8,867 | 293 | ||||||
Shares redeemed | (85,054 | ) | (78,473 | ) | ||||
|
|
|
| |||||
Net increase in shares outstanding | 153,237 | 688,737 | ||||||
|
|
|
|
(a) | For the period April 28, 2015 (commencement of operations) through October 31, 2015. |
(b) | The Fund charges a 2% redemption fee on shares redeemed within 60 days of purchase. Shares are redeemed at the NAV if held longer than 60 days. |
See accompanying notes which are an integral part of these financial statements.
31
SMI 50/40/10 FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended April 30, 2016 (Unaudited) | For the Period Ended October 31, 2015 (a) | |||||||
Increase (Decrease) in Net Assets due to: | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 43,010 | $ | (4,088 | ) | |||
Long term capital gain dividends from investment companies | 197,503 | — | ||||||
Net realized (loss) on investment transactions | (426,553 | ) | (1,024,798 | ) | ||||
Net change in unrealized appreciation on investments | 44,289 | 204,440 | ||||||
|
|
|
| |||||
Net decrease in net assets resulting from operations | (141,751 | ) | (824,446 | ) | ||||
|
|
|
| |||||
Distributions From: | ||||||||
Net investment income | (91,435 | ) | — | |||||
|
|
|
| |||||
Total distributions | (91,435 | ) | — | |||||
|
|
|
| |||||
Capital Transactions | ||||||||
Proceeds from shares sold | 5,937,990 | 14,865,557 | ||||||
Proceeds from redemption fees (b) | 46 | 16 | ||||||
Reinvestment of distributions | 89,149 | — | ||||||
Amount paid for shares redeemed | (1,606,932 | ) | (894,602 | ) | ||||
|
|
|
| |||||
Net increase in net assets resulting from capital transactions | 4,420,253 | 13,970,971 | ||||||
|
|
|
| |||||
Total Increase in Net Assets | 4,187,067 | 13,146,525 | ||||||
|
|
|
| |||||
Net Assets | ||||||||
Beginning of period | 13,146,525 | — | ||||||
|
|
|
| |||||
End of period | $ | 17,333,592 | $ | 13,146,525 | ||||
|
|
|
| |||||
Accumulated net investment loss included in net assets at end of period | $ | (52,513 | ) | $ | (4,088 | ) | ||
|
|
|
| |||||
Share Transactions | ||||||||
Shares sold | 658,026 | 1,522,749 | ||||||
Shares issued in reinvestment of distributions | 9,764 | — | ||||||
Shares redeemed | (182,512 | ) | (94,481 | ) | ||||
|
|
|
| |||||
Net increase in shares outstanding | 485,278 | 1,428,268 | ||||||
|
|
|
|
(a) | For the period April 29, 2015 (commencement of operations) through October 31, 2015. |
(b) | The Fund charges a 2% redemption fee on shares redeemed within 60 days of purchase. Shares are redeemed at the NAV if held longer than 60 days. |
See accompanying notes which are an integral part of these financial statements.
32
This page intentionally left blank.
33
SOUND MIND INVESTING FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding during each period)
For the Period Ended April 30, 2016 (Unaudited) | ||||
Selected Per Share Data: | ||||
Net asset value, beginning of period | $ | 11.76 | ||
|
| |||
Income from investment operations: | ||||
Net investment income (loss)(a) | 0.02 | |||
Net realized and unrealized gain | (0.24 | ) | ||
|
| |||
Total from investment operations | (0.22 | ) | ||
|
| |||
Less Distributions to Shareholders: | ||||
From net investment income | — | |||
From net realized gain | (1.51 | ) | ||
|
| |||
Total distributions | (1.51 | ) | ||
|
| |||
Paid in capital from redemption fees(c) | — | |||
|
| |||
Net asset value, end of period | $ | 10.03 | ||
|
| |||
Total Return(d) | (2.08 | )%(e) | ||
Ratios and Supplemental Data: | ||||
Net assets, end of period (000) | $ | 206,771 | ||
Ratio of expenses to average net assets(f) | 1.16 | %(g)(h) | ||
Ratio of net investment income (loss) to average net assets(a)(i) | 0.26 | %(h) | ||
Portfolio turnover rate | 63.22 | %(e) |
(a) | Recognition of the net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests. |
(b) | Resulted in less than $0.005 per share. |
(c) | Redemption fee resulted in 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) | Not annualized. |
(f) | These ratios exclude the impact of expenses of the underlying funds in which the Fund invests as represented in the Schedule of Investments. |
(g) | This ratio does not include the effects of other expenses refunded by the underlying funds in which the Fund invests or line of credit interest expense and borrowing costs. If these refunds and borrowing costs had been included, the ratio of expenses to average net assets would have been 1.16% for the period ended April 30, 2016 and 1.14%, 1.09%, 1.17%, 1.15% and 1.14% for the years ended October 31, 2015, October 31, 2014, October 31, 2013, October 31, 2012 and October 31, 2011, respectively. |
(h) | Annualized. |
(i) | This ratio is presented net of the other expenses refunded by the underlying funds in which the Fund invests. |
(j) | Portfolio turnover rate excludes $21,405,392 of purchases, which is the book value of securities acquired at the time of merger with SMI Managed Volatility Fund. |
See accompanying notes which are an integral part of these financial statements.
34
SOUND MIND INVESTING FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding during each period) – (Continued)
Year Ended October 31, 2015 | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||
$ | 13.94 | $ | 14.47 | $ | 11.36 | $ | 10.74 | $ | 10.71 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
(0.08 | ) | (0.09 | ) | (0.05 | ) | — | 0.02 | |||||||||||
0.16 | 1.12 | 3.66 | 0.62 | 0.04 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
0.08 | 1.03 | 3.61 | 0.62 | 0.06 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
(0.07 | ) | (0.05 | ) | — | (b) | — | (0.03 | ) | ||||||||||
(2.19 | ) | (1.51 | ) | (0.50 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
(2.26 | ) | (1.56 | ) | (0.50 | ) | — | (0.03 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
— | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | 11.76 | $ | 13.94 | $ | 14.47 | $ | 11.36 | $ | 10.74 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
0.16 | % | 7.38 | % | 33.01 | % | 5.77 | % | 0.50 | % | |||||||||
$ | 227,339 | $ | 282,670 | $ | 293,035 | $ | 272,092 | $ | 288,727 | |||||||||
1.13 | %(g) | 1.11 | %(g) | 1.17 | %(g) | 1.15 | %(g) | 1.15 | %(g) | |||||||||
(0.59 | )% | (0.64 | )% | (0.41 | )% | 0.00 | % | 0.13 | % | |||||||||
216.17 | % | 135.60 | % | 93.59 | % | 187.39 | % | 165.12 | %(j) |
See accompanying notes which are an integral part of these financial statements.
35
SMI CONSERVATIVE ALLOCATION FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding during each period)
For the Period Ended April 30, 2016 (Unaudited) | ||||
Selected Per Share Data: | ||||
Net asset value, beginning of period | $ | 9.65 | ||
|
| |||
Income from investment operations: | ||||
Net investment income (loss)(b) | 0.06 | |||
Net realized and unrealized gain (loss) | (0.08 | ) | ||
|
| |||
Total from investment operations | (0.02 | ) | ||
|
| |||
Less Distributions to Shareholders: | ||||
From net investment income | (0.10 | ) | ||
From net realized gain | (0.20 | ) | ||
|
| |||
Total distributions | (0.30 | ) | ||
|
| |||
Paid in capital from redemption fees | — | (c) | ||
|
| |||
Net asset value, end of period | $ | 9.33 | ||
|
| |||
Total Return(d) | (0.20 | )%(e) | ||
Ratios and Supplemental Data: | ||||
Net assets, end of period (000) | $ | 19,616 | ||
Ratio of expenses to average net assets(f) | 1.15 | %(g)(h) | ||
Ratio of expenses to average net assets before waiver and reimbursement(f) | 1.61 | %(h) | ||
Ratio of net investment income (loss) to average net assets(b)(i) | 1.34 | %(h) | ||
Portfolio turnover rate | 140.67 | %(e) |
(a) | For the period December 30, 2010 (the date the Fund commenced operations) through October 31, 2011. |
(b) | Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests. |
(c) | Redemption fees resulted in less than $0.005 per share. |
(d) | Total return in the above table represents the rate that the investor would have earned on an investment in the Fund, assuming reinvestment of dividends. |
(e) | Not annualized. |
(f) | These ratios exclude the impact of expenses of the underlying funds in which the Fund may invest, as represented in the Schedule of Investments. |
(g) | This ratio does not include the effects of other expenses refunded by the underlying funds in which the Fund invests or line of credit interest expense and borrowing costs. If these refunds and borrowing costs had been included, the ratio of expenses to average net assets would have been 1.16% for the period ended April 30, 2016 and 1.16%, 1.16%, 1.13%, 1.14%, and 1.14% for the periods ended April 30, 2016, October 31, 2015, October 31, 2014, October 31, 2012 and October 31, 2011, respectively. |
(h) | Annualized. |
(i) | This ratio is presented net of the other expenses refunded by the underlying funds in which the Fund invests. |
See accompanying notes which are an integral part of these financial statements.
36
SMI CONSERVATIVE ALLOCATION FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding during each period) – (Continued)
Year Ended October 31, 2015 | Year Ended | Year Ended | Year Ended | Period Ended | ||||||||||||||
$ | 11.52 | $ | 12.20 | $ | 10.31 | $ | 9.70 | $ | 10.00 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
0.08 | (0.01 | ) | (0.02 | ) | 0.03 | (0.01 | ) | |||||||||||
(0.52 | ) | 0.54 | 2.11 | 0.63 | (0.30 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
(0.44 | ) | 0.53 | 2.09 | 0.66 | (0.31 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
(0.09 | ) | (0.06 | ) | (0.03 | ) | (0.05 | ) | — | ||||||||||
(1.34 | ) | (1.15 | ) | (0.17 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
(1.43 | ) | (1.21 | ) | (0.20 | ) | (0.05 | ) | — | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
— | (c) | — | (c) | — | (c) | — | (c) | 0.01 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
$ | 9.65 | $ | 11.52 | $ | 12.20 | $ | 10.31 | $ | 9.70 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
(4.58 | )% | 4.46 | % | 20.56 | % | 6.89 | % | (3.00 | )%(e) | |||||||||
$ | 22,203 | $ | 30,606 | $ | 29,826 | $ | 37,258 | $ | 34,830 | |||||||||
1.15 | %(g) | 1.15 | %(g) | 1.15 | % | 1.15 | %(g) | 1.15 | %(g)(h) | |||||||||
1.49 | % | 1.31 | % | 1.52 | % | 1.49 | % | 1.80 | %(h) | |||||||||
0.82 | % | (0.17 | )% | (0.06 | )% | 0.29 | % | (0.17 | )%(h) | |||||||||
377.51 | % | 255.50 | % | 270.30 | % | 349.33 | % | 276.04 | %(e) |
See accompanying notes which are an integral part of these financial statements.
37
SMI DYNAMIC ALLOCATION FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding during each period)
For the Period Ended April 30, 2016 (Unaudited) | ||||
Selected Per Share Data: | ||||
Net asset value, beginning of period | $ | 10.99 | ||
|
| |||
Income from investment operations: | ||||
Net investment income (loss)(b) | 0.07 | |||
Net realized and unrealized gain (loss) | (0.13 | ) | ||
|
| |||
Total from investment operations | (0.06 | ) | ||
|
| |||
Less Distributions to Shareholders: | ||||
From net investment income | (0.14 | ) | ||
From net realized gains | — | |||
|
| |||
Total distributions | (0.14 | ) | ||
|
| |||
Paid in capital from redemption fees(c) | — | |||
|
| |||
Net asset value, end of period | $ | 10.79 | ||
|
| |||
Total Return(d) | (0.58 | )%(e) | ||
Ratios and Supplemental Data: | ||||
Net assets, end of period (000) | $ | 185,580 | ||
Ratio of expenses to average net assets(f) | 1.16 | %(g) | ||
Ratio of net investment income to average net assets(b) | 1.14 | %(g) | ||
Portfolio turnover rate | 78.62 | %(e) |
(a) | For the period February 28, 2013 (the date the Fund commenced operations) through October 31, 2013. |
(b) | Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests. |
(c) | Redemption fees resulted in less than $0.005 per share. |
(d) | Total return in the above table represents the rate that the investor would have earned on an investment in the Fund, assuming reinvestment of dividends. |
(e) | Not annualized. |
(f) | These ratios exclude the impact of expenses of the underlying funds in which the Fund may invest, as represented in the Schedule of Investments. |
(g) | Annualized. |
See accompanying notes which are an integral part of these financial statements.
38
SMI DYNAMIC ALLOCATION FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding during each period) – (Continued)
Year Ended October 31, 2015 | Year Ended | Period Ended | ||||||||
$ | 11.81 | $ | 10.95 | $ | 10.00 | |||||
|
|
|
|
|
| |||||
0.19 | 0.23 | 0.05 | ||||||||
(0.69 | ) | 0.81 | 0.90 | |||||||
|
|
|
|
|
| |||||
(0.50 | ) | 1.04 | 0.95 | |||||||
|
|
|
|
|
| |||||
(0.23 | ) | (0.18 | ) | — | ||||||
(0.09 | ) | — | — | |||||||
|
|
|
|
|
| |||||
(0.32 | ) | (0.18 | ) | — | ||||||
|
|
|
|
|
| |||||
— | — | — | ||||||||
|
|
|
|
|
| |||||
$ | 10.99 | $ | 11.81 | $ | 10.95 | |||||
|
|
|
|
|
| |||||
(4.52 | )% | 9.64 | % | 9.50 | %(e) | |||||
$ | 197,539 | $ | 147,003 | $ | 68,290 | |||||
1.15 | % | 1.20 | % | 1.30 | %(g) | |||||
1.62 | % | 2.13 | % | 0.94 | %(g) | |||||
248.18 | % | 134.71 | % | 68.64 | %(e) |
See accompanying notes which are an integral part of these financial statements.
39
SMI BOND FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding during each period)
For the Period Ended April 30, 2016 (Unaudited) | Period Ended October 31, 2015(a) | |||||||
Selected Per Share Data: | ||||||||
Net asset value, beginning of period | $ | 9.81 | $ | 10.00 | ||||
|
|
|
| |||||
Income from investment operations: | ||||||||
Net investment income (loss)(b) | 0.10 | 0.01 | ||||||
Net realized and unrealized gain (loss) | (0.01 | )(c) | (0.19 | ) | ||||
|
|
|
| |||||
Total from investment operations | 0.09 | (0.18 | ) | |||||
|
|
|
| |||||
Less Distributions to Shareholders: | ||||||||
From net investment income | (0.12 | ) | (0.01 | ) | ||||
|
|
|
| |||||
Total distributions | (0.12 | ) | (0.01 | ) | ||||
|
|
|
| |||||
Paid in capital from redemption fees(d) | — | — | ||||||
|
|
|
| |||||
Net asset value, end of period | $ | 9.78 | $ | 9.81 | ||||
|
|
|
| |||||
Total Return(e) | 0.91 | %(f) | (1.82 | )%(f) | ||||
Ratios and Supplemental Data: | ||||||||
Net assets, end of period (000) | $ | 8,237 | $ | 6,754 | ||||
Ratio of expenses to average net assets(g) | 0.85 | %(i) | 0.85 | %(h)(i) | ||||
Ratio of expenses to average net assets before waiver and reimbursement(g) | 2.52 | %(i) | 4.18 | %(i) | ||||
Ratio of net investment income (loss) to average net assets(b) | 1.89 | %(i) | 0.11 | %(i) | ||||
Portfolio turnover rate | 219.00 | %(f) | 399.72 | %(f) |
(a) | For the period April 28, 2015 (the date the Fund commenced operations) through October 31, 2015. |
(b) | Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests. |
(c) | The amount shown for a share outstanding throughout the period does not accord with the change in aggregate gains and losses in the portfolio of securities during the period because of the timing of sales and purchases of fund shares in relation to fluctuating market values during the period. |
(d) | Redemption fees resulted in less than $0.005 per share. |
(e) | Total return in the above table represents the rate that the investor would have earned on an investment in the Fund, assuming reinvestment of dividends. |
(f) | Not annualized. |
(g) | These ratios exclude the impact of expenses of the underlying funds in which the Fund may invest, as represented in the Schedule of Investments. |
(h) | This ratio does not include the effects of line of credit interest expense and borrowing costs. If these borrowing costs had been included, the ratio of expenses to average net assets would have been 0.86% for the period ended October 31, 2015. |
(i) | Annualized. |
See accompanying notes which are an integral part of these financial statements.
40
SMI 50/40/10 FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding during each period)
For the Period Ended April 30, 2016 (Unaudited) | Period Ended October 31, 2015(a) | |||||||
Selected Per Share Data: | ||||||||
Net asset value, beginning of period | $ | 9.20 | $ | 10.00 | ||||
|
|
|
| |||||
Income from investment operations: | ||||||||
Net investment income (loss)(b) | 0.03 | — | (c) | |||||
Net realized and unrealized gain (loss) | (0.12 | ) | (0.80 | ) | ||||
|
|
|
| |||||
Total from investment operations | (0.09 | ) | (0.80 | ) | ||||
|
|
|
| |||||
Less Distributions to Shareholders: | ||||||||
From net investment income | (0.05 | ) | — | |||||
|
|
|
| |||||
Total distributions | (0.05 | ) | — | |||||
|
|
|
| |||||
Paid in capital from redemption fees(d) | — | — | ||||||
|
|
|
| |||||
Net asset value, end of period | $ | 9.06 | $ | 9.20 | ||||
|
|
|
| |||||
Total Return(e) | (0.96 | )%(f) | (8.00 | )%(f) | ||||
Ratios and Supplemental Data: | ||||||||
Net assets, end of period (000) | $ | 17,334 | $ | 13,147 | ||||
Ratio of expenses to average net assets(g) | 1.45 | %(h) | 1.45 | %(h) | ||||
Ratio of expenses to average net assets before waiver and reimbursement(g) | 1.90 | %(h) | 2.75 | %(h) | ||||
Ratio of net investment income (loss) to average net assets(b) | 0.56 | %(h) | (0.09 | )%(h) | ||||
Portfolio turnover rate | 82.01 | %(f) | 184.30 | %(f) |
(a) | For the period April 29, 2015 (the date the Fund commenced operations) through October 31, 2015. |
(b) | Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests. |
(c) | Amount is less than $0.005 per share. |
(d) | Redemption fee resulted in less than $0.005 per share. |
(e) | Total return in the above table represents the rate that the investor would have earned on an investment in the Fund, assuming reinvestment of dividends. |
(f) | Not annualized. |
(g) | These ratios exclude the impact of expenses of the underlying funds in which the Fund may invest, as represented in the Schedule of Investments. |
(h) | Annualized. |
See accompanying notes which are an integral part of these financial statements.
41
SMI FUNDS
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited)
NOTE 1. ORGANIZATION
The Sound Mind Investing Fund (“SMI Fund”), SMI Conservative Allocation Fund, SMI Dynamic Allocation Fund, SMI Bond Fund and SMI 50/40/10 Fund (each a “Fund” and collectively, the “Funds”) are each a diversified series of The Valued Advisers Trust (the “Trust”). Pursuant to a reorganization that took place on February 28, 2013, the SMI Fund and SMI Conservative Allocation Fund are the successors to the series of the Unified Series Trust (the “Predecessor Funds”) with the same names. The Predecessor Funds had the same investment objectives and strategies and substantially the same investment policies as the Funds. The SMI Fund was organized on August 29, 2005, and commenced operations on December 2, 2005. The SMI Conservative Allocation Fund was organized on November 13, 2010, and commenced operations on December 30, 2010. The SMI Dynamic Allocation Fund was organized on December 11, 2012, and commenced operations on February 28, 2013. The SMI Bond Fund was organized on March 11, 2015, and commenced operations on April 28, 2015. The SMI 50/40/10 Fund was organized on March 11, 2015, and commenced operations on April 29, 2015. 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. Each Fund is one of a series of funds currently authorized by the Trustees. The investment adviser to the Funds is SMI Advisory Services, LLC (the “Adviser”). The SMI Fund seeks to provide long-term capital appreciation. The SMI Conservative Allocation Fund, SMI Dynamic Allocation Fund, SMI Bond Fund and SMI 50/40/10 Fund seek total return.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The Funds are investment companies and follow 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 Funds in the preparation of their financial statements. These policies are in conformity with the generally accepted accounting principles in the United States of America (“GAAP”).
Securities Valuations – All investments in securities are recorded at their estimated fair value as described in Note 3.
Federal Income Taxes – The Funds make no provision for federal income or excise tax. The Funds intend to qualify each year as regulated investment companies (“RICs”) 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 their taxable income. The Funds also intend to distribute sufficient net investment income and net capital gains, if any, so that they will not be subject to excise tax on undistributed income and gains. If the required amount of net investment income or gains is not distributed, the Funds could incur a tax expense.
42
SMI FUNDS
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited), (Continued)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – (Continued)
As of and during the period ended April 30, 2016, the Funds did not have a liability for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statements of Operations. During the period ended April 30, 2016, the Funds did not incur any interest or penalties.
Expenses – Expenses incurred by the Trust, or at the fund complex level, that do not relate to a specific fund are allocated to the individual funds based on each fund’s relative net assets or other appropriate basis.
Security Transactions and Related Income – The Funds follow industry practice and record security transactions on the trade date for financial reporting purposes. For financial statement and income tax purposes, the specific identification method is used for determining gains or losses. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Short-term capital gain distributions from underlying funds are classified as dividend income for financial reporting purposes. Long-term capital gain distributions are broken out as such. Discounts and premiums on securities purchased are amortized or accreted using the effective interest method. The ability of issuers of debt securities held by the Funds to meet their obligations may be affected by economic and political developments in a specific country or region.
Dividends and Distributions – The Funds typically distribute substantially all of their net investment income in the form of dividends and taxable capital gains to their shareholders at least annually. These distributions, which are recorded on the ex-dividend date, are automatically reinvested in each Fund unless shareholders request cash distributions on their application or through a written request. 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. 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 (“NAV”) per share of the Funds.
Swap Contracts – The SMI Conservative Allocation Fund, SMI Dynamic Allocation Fund, SMI Bond Fund and SMI 50/40/10 Fund may enter into credit default swap contracts. A credit default swap involves a protection buyer and a protection seller. The Funds may be either a protection buyer or seller. The protection buyer makes periodic premium payments to the protection seller during the swap term in exchange for the protection seller agreeing to make certain defined payments to the protection buyer in the event that certain defined credit events occur with respect to a particular security, issuer, or basket of securities. The “notional amount” of the swap agreement is the agreed upon amount or value of the underlying asset used for calculating the obligations that the parties to a swap agreement have agreed to exchange. The Funds’ obligation under a swap agreement will be accrued daily (offset against amounts owed to the Funds) and any accrued but unpaid net amounts owed to a swap counterparty may be
43
SMI FUNDS
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited), (Continued)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – (Continued)
collateralized by designating liquid assets on the Fund’s books and records. The credit default swaps are marked to market daily based upon quotes received from a pricing agent and any change in value is recorded in unrealized appreciation/depreciation. Periodic payments paid or received are recorded in realized gain/loss. Any premium paid or received by the Funds upon entering into a credit default swap contract is recorded as an asset or liability and amortized daily as a component of realized gain (loss) on the Statements of Operations. Payments made or received as a result of a credit event or termination of the contract are recognized, net of a proportional amount of the upfront payment, as realized gains/losses. In addition to bearing the risk that the credit event will occur as a protection seller, the Funds could be exposed to market risk due to unfavorable changes in interest rates or in the price of the underlying security or index, the possibility that the Funds may be unable to close out its position at the same time or at the same price as if it had purchased comparable publicly traded securities, or that the counterparty may default on its obligation to perform. Please see Note 4 for information on swap agreement activity during the period ended April 30, 2016.
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, for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and 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 Funds’ 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.) |
44
SMI FUNDS
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited), (Continued)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – (Continued)
• | Level 3 – significant unobservable inputs (including each 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 which is reported, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Equity securities, including exchange-traded funds, are generally valued by using market quotations, but may be valued on the basis of prices furnished by a pricing agent 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 agent at the last quoted sale price. Lacking a last sale price, an exchange traded security is generally valued by the pricing agent at its last bid price. Securities traded in the NASDAQ over-the-counter market are generally valued by the pricing agent at the NASDAQ Official Closing Price.
When using the market quotations or close prices provided by the pricing agent and when the market is considered active, the security will be classified as a Level 1 security. Sometimes, an equity security owned by the Funds 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 by the Adviser, in conformity with policies adopted by and subject to review by the Board of Trustees (“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 NAV provided by the pricing agent of the Funds. These securities are categorized as Level 1 securities. In the event that the ending NAV for a mutual fund is unavailable at the end of night pricing time, the Adviser may, in accordance with the Trust’s valuation policies, consider all appropriate factors in determining the fair value of the mutual fund. In such cases the security will generally be categorized as a Level 2 security.
Derivative instruments that the Funds invest in, such as swap agreements, are generally traded over-the-counter. The credit default swaps the SMI Conservative Allocation Fund, SMI Dynamic Allocation Fund, SMI Bond Fund and SMI 50/40/10 Fund invests in will generally be valued at the mean of bid and ask prices provided by a major credit default swap pricing agent and will generally be classified as Level 2 securities.
Fixed income securities, including asset-backed securities, when valued using market quotations in an active market, will be categorized as Level 1 securities. However, they 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
45
SMI FUNDS
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited), (Continued)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – (Continued)
of such securities. A pricing service uses various inputs and techniques, that include broker-dealer quotations, live trading levels, recently executed transactions in securities of the issuer or comparable issuers, and option adjusted spread models that include base curve and spread curve inputs. Adjustments to individual bonds can be applied to recognize trading differences compared to other bonds issued by the same issuer. The broker-dealer quotations received are supported by credit analysis of the issuer that takes into consideration credit quality assessments, daily trading activity, and the activity of the underlying equities, listed bonds and sector-specific trends. Data used to establish quotes for asset-backed securities includes analysis of cash flows, pre-payment speeds, default rates, delinquency assumptions, and assumptions regarding collateral and loss. To the extent that these inputs are observable, the fixed income securities are categorized as Level 2 securities. If the Adviser decides that a price provided by the pricing service does not accurately reflect the fair value of the securities, when prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Adviser, in conformity with policies adopted by and subject to review of the Board. These securities may be categorized as Level 3 securities.
Short-term investments in fixed income securities, (those with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity), in the absence of an available price may be valued by using the amortized cost method of valuation, which the Board has determined represents fair value. These securities will be classified as Level 2 securities.
In accordance with the Trust’s valuation policies, 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 that the owner might reasonably expect to receive for them upon their current sale. Methods that are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market prices 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. Fair-value 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. Fair-value pricing may also be used in instances when the bonds the Funds’ may invest in default or otherwise cease to have market quotations readily available.
46
SMI FUNDS
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited), (Continued)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – (Continued)
The following is a summary of the inputs used to value the Funds’ investments as of April 30, 2016:
Valuation Inputs | ||||||||||||||||
SMI Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Mutual Funds – greater than 1% of net assets | $ | 149,511,675 | $ | — | $ | — | $ | 149,511,675 | ||||||||
Mutual Funds – less than 1% of net assets | 2,160,272 | 5,629 | — | 2,165,901 | ||||||||||||
Exchange-Traded Funds | 54,369,732 | — | — | 54,369,732 | ||||||||||||
Money Market Securities | 2,008,714 | — | — | 2,008,714 | ||||||||||||
Total Investments | $ | 208,050,393 | $ | 5,629 | $ | — | $ | 208,056,022 |
Valuation Inputs | ||||||||||||||||
SMI Conservative Allocation Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Exchange-Traded Funds | $ | 13,587,351 | $ | — | $ | — | $ | 13,587,351 | ||||||||
Mutual Funds | 5,935,761 | — | — | 5,935,761 | ||||||||||||
Money Market Securities | 99,290 | — | — | 99,290 | ||||||||||||
Total Investments | $ | 19,622,402 | $ | — | $ | — | $ | 19,622,402 |
Valuation Inputs | ||||||||||||||||
SMI Dynamic Allocation Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Exchange-Traded Funds | $ | 171,908,647 | $ | — | $ | — | $ | 171,908,647 | ||||||||
Mutual Funds | 7,865,781 | — | — | 7,865,781 | ||||||||||||
Money Market Securities | 5,875,081 | — | — | 5,875,081 | ||||||||||||
Total Investments | $ | 185,649,509 | $ | — | $ | — | $ | 185,649,509 |
47
SMI FUNDS
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited), (Continued)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – (Continued)
Valuation Inputs | ||||||||||||||||
SMI Bond Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Exchange-Traded Funds | $ | 1,906,289 | $ | — | $ | — | $ | 1,906,289 | ||||||||
Mutual Funds | 6,066,571 | — | — | 6,066,571 | ||||||||||||
Money Market Securities | 25,182 | — | — | 25,182 | ||||||||||||
Total Investments | $ | 7,998,042 | $ | — | $ | — | $ | 7,998,042 |
Valuation Inputs | ||||||||||||||||
SMI 50/40/10 Fund | Level 1 – Quoted Prices in Active Markets | Level 2 – Other Significant Observable Inputs | Level 3 – Significant Unobservable Inputs | Total | ||||||||||||
Exchange-Traded Funds | $ | 9,978,976 | $ | — | $ | — | $ | 9,978,976 | ||||||||
Common Stocks* | 970,638 | — | — | 970,638 | ||||||||||||
Mutual Funds | 5,724,997 | — | — | 5,724,997 | ||||||||||||
Money Market Securities | 197,965 | — | — | 197,965 | ||||||||||||
Total Investments | $ | 16,872,576 | $ | — | $ | — | $ | 16,872,576 |
* | Refer to Schedule of Investments for industry classifications. |
The Funds did not hold any investments at any time during the reporting period for which other significant unobservable inputs (Level 2) were used in determining fair value. The Funds did not hold any investments during the reporting period for 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 end of the reporting period. The transfers from Level 1 to Level 2 represent securities which were fair valued at the end of the period that were not at the beginning of the period. Transfers from Level 2 to Level 1 represent securities which were fair valued at the beginning of the period but not at April 30, 2016. The following is a summary of the transfers between Level 1 and Level 2 of the fair value hierarchy for the period ended April 30, 2016:
Transfers from Level 1 to Level 2 | Transfers from Level 2 to Level 1 | |||||||||
SMI Fund | ||||||||||
Mutual Funds | $ | 5,629 | $ | 13,710,188 |
48
SMI FUNDS
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited), (Continued)
NOTE 4. DERIVATIVE TRANSACTIONS
The SMI Conservative Allocation Fund, SMI Dynamic Allocation Fund, SMI Bond Fund and SMI 50/40/10 Fund may obtain exposure to the fixed income market by investing in credit default swap (“CDX”) contracts. These Funds may use CDX contracts as an additional avenue in which to bring value to the Funds. These Funds may use CDX contracts as an alternative to buying, selling, or holding certain securities in the fixed income market. The use of CDX contracts may provide a less expensive, more expedient, or more specifically focused way to invest than traditional fixed income securities would. These Funds may enter into single name CDX agreements to gain exposure to a particular company when it is more economically attractive to do so rather than purchasing traditional bonds. These Funds may also invest in CDX index products and options thereon that allow these Funds to gain broad market exposure but with less company-specific risk than single name CDX agreements.
These Funds enter into CDX contracts to gain exposure or to mitigate specific forms of credit risk. Swaps expose these Funds to counterparty risk (described below). These Funds could also suffer losses with respect to a swap agreement if these Funds are unable to terminate the agreement or reduce its exposure through offsetting transactions.
Many of the markets in which these Funds participate in credit default transactions are “over the counter” or “interdealer” markets. The participants in these markets are typically not subject to credit evaluation and regulatory oversight as are members of “exchange based markets”. When these Funds invest in CDX contracts, it is assuming a credit risk with regard to parties with whom it trades and also bears the risk of settlement default. These risks may differ materially from those associated with transactions effected on an exchange, which generally are backed by clearing organization guarantees, daily marking-to-market and settlement, and segregation and minimum capital requirements applicable to intermediaries. Transactions entered into directly between two counterparties generally do not benefit from such protections. This exposes these Funds to the risk that the counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the contract (whether or not bona fide) or because of a credit or liquidity problem, thus causing these Funds to suffer a loss. To mitigate counterparty risk, these Funds will sometimes require the counterparty to post collateral to the Funds’ custodian to cover the exposure.
These Funds may also invest in credit default swap index products and in options on credit default swap index products. These instruments are designed to track segments of the credit default swap market and provide investors with exposure to specific “baskets” of issuers of bonds or loans. In general, the value of the credit default swap market provides investors with exposure to specific “baskets” of issuers of bonds or loans. In general, the value of the credit default swap index product will go up or down in response to changes in the perceived credit risk and default experience of the basket of issuers, instead of the exchange of the stream of payments for the payment of the notional amount (if a credit event occurs) that is the substance of a single name credit default swap. Such investments are subject to liquidity risks as well as counterparty and other risks associated with investments in credit default swaps discussed above.
There were no derivative transactions during the period ended April 30, 2016. As of April 30, 2016, the SMI Conservative Allocation Fund had no segregated cash collateral for outstanding swap contracts.
49
SMI FUNDS
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited), (Continued)
NOTE 5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Adviser, under the terms of the management agreement with respect to each Fund (each an “Agreement”), manages the Funds’ investments. As compensation for its management services, each Fund is obligated to pay the Adviser a fee based on each Fund’s average daily net assets as follows:
Fund Assets | SMI Fund | SMI Conservative Allocation | SMI Dynamic Allocation | ||||||||||||
$1 – $100 million | 1.00% | 0.90% | 1.00% | ||||||||||||
$100,000,001 – $250 million | 1.00% | 0.80% | 1.00% | ||||||||||||
$250,000,001 to $500 million | 0.90% | 0.70% | 0.90% | ||||||||||||
Over $500 million | 0.80% | 0.60% | 0.80% | ||||||||||||
Management fees earned | $ 1,047,573 | $ 91,214 | $ 930,646 | ||||||||||||
Fees waived and expenses reimbursed by Adviser | — | (45,843) | — |
Fund Assets | SMI Bond Fund Management Fee | |
$1 – $99,999,999 | 0.75% | |
$100 million to $250 million | 0.70% | |
Over $250 million | 0.65% | |
Management fees earned | $ 27,319 | |
Fees waived and expenses reimbursed by Adviser | (58,763) |
Fund Assets | SMI 50/40/10 Fund Management Fee | |
$1 – $250 million | 1.00% | |
$250,000,001 to $500 million | 0.90% | |
Over $500 million | 0.80% | |
Management fees earned | $ 77,027 | |
Fees waived and expenses reimbursed by Adviser | (34,662) |
The Adviser contractually has agreed to waive its management fee and reimburse certain operating expenses, but only to the extent necessary so that each Fund’s total annual operating expenses (excluding interest, taxes, brokerage commissions, other expenses which are capitalized in accordance with GAAP, extraordinary expenses, dividend expense on short sales, 12b-1 fees, and acquired fund fees and expenses) do not exceed 1.50% of the Fund’s average daily net assets with respect to the SMI Fund, 1.15% with respect to the SMI Conservative Allocation Fund, 1.45% with respect to the SMI Dynamic Allocation Fund, 0.85% with respect to the SMI Bond Fund, and 1.45% with respect to the SMI 50/40/10 Fund through February 28, 2017.
50
SMI FUNDS
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited), (Continued)
NOTE 5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES – (Continued)
Each fee waiver or expense reimbursement is subject to recoupment by the applicable Fund within the three fiscal years following the fiscal year in which the particular waiver or expense or incurred; provided that such Fund is able to make the recoupment without exceeding the applicable expense limitation that is in effect at the time of the recoupment or at the time of the waiver or reimbursement.
The amount subject to recoupment by the SMI Conservative Allocation Fund, SMI Bond Fund and SMI 50/40/10 Fund, pursuant to the aforementioned conditions, at April 30, 2016 is as follows:
Recoverable through October 31, | SMI Conservative Allocation Fund | SMI Bond Fund | SMI 50/40/10 Fund | |||||||||
2016 | $ | 116,168 | $ | — | $ | — | ||||||
2017 | 50,773 | — | — | |||||||||
2018 | 88,520 | 70,768 | 54,878 | |||||||||
2019 | 45,843 | 58,763 | 34,662 |
The Trust retains Ultimus Asset Services, LLC (“Ultimus”), formerly Huntington Asset Services, Inc. (“HASI”), to provide the Funds with administrative services, accounting, transfer agent and compliance services including all regulatory reporting. Ultimus contractually agreed to waive 100% of its administration, fund accounting and transfer agency fees (excluding out-of-pocket expenses) for the SMI Bond Fund through April 30, 2016. Expenses incurred by the Funds for these expenses are allocated to the individual Funds based on each Fund’s relative net assets. Certain officers of the Trust are members of management and employees of Ultimus.
Unified Financial Securities, LLC, (the “Distributor”) acts as the principal distributor of the Fund’s Shares. Huntington National Bank is the custodian of the Funds’ investments (the “Custodian”). Effective at the close of business on December 31, 2015, Ultimus Fund Solutions, LLC, acquired HASI and the Distributor from Huntington Bancshares, Inc. (“HBI”). Prior to January 1, 2106, the Custodian, HASI and the Distributor were under common control by HBI. For the period ended April 30, 2016, net of fees for administrative, transfer agent, and fund accounting services, and reimbursement of out-of-pocket expenses amounts due to Ultimus at April 30, 2016, were as follows:
SMI Fund | SMI Conservative | SMI Dynamic | SMI Bond | SMI 50/40/10 | ||||||||||||||||
Administration expenses | $ | 24,480 | $ | 2,412 | $ | 21,661 | $ | — | $ | 1,522 | ||||||||||
Transfer agent expenses | 30,038 | 8,281 | 16,672 | 3,900 | 6,210 | |||||||||||||||
Fund accounting expenses | 14,154 | 1,394 | 12,521 | — | 877 | |||||||||||||||
Payable to Ultimus | 12,265 | 2,655 | 8,483 | 884 | 798 |
There were no payments made to the Distributor by the Funds for period ended April 30, 2016. Certain officers of the Trust are officers of the Distributor and such persons may be deemed at be affiliates of the Distributor.
51
SMI FUNDS
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited), (Continued)
NOTE 6. INVESTMENTS
For the period ended April 30, 2016, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations were as follows:
SMI Fund | SMI Conservative | SMI Dynamic | SMI Bond | SMI 50/40/10 Fund | ||||||||||||||||
Purchases | ||||||||||||||||||||
U.S. Government Obligations | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Other | 133,246,626 | 26,475,712 | 125,483,567 | 17,237,216 | 15,749,943 | |||||||||||||||
Sales | ||||||||||||||||||||
U.S. Government Obligations | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Other | 138,888,707 | 28,576,130 | 135,396,677 | 15,943,189 | 11,660,108 |
NOTE 7. LINE OF CREDIT
During the period ended April 30, 2016, the Trust, on behalf of the Funds, entered into in a short-term credit agreement (“Line of Credit”) with Huntington National Bank (“Huntington”), expiring on February 5, 2017. Under the terms of the agreement, the Funds may borrow up to $5 million at an interest rate of LIBOR plus 150 basis points. 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 $5 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 Funds 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 5% 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. To the extent that the line of credit is utilized, it will be collateralized by securities in the Funds’ portfolios.
52
SMI FUNDS
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited), (Continued)
NOTE 7. LINE OF CREDIT – (Continued)
As of April 30, 2016, the Funds had no outstanding borrowings under this Line of Credit.
Fund | Average Daily Loan Balance | Weighted Average Interest Rate | Number of Days Outstanding* | Interest Expense Incurred | Maximum Loan Outstanding | |||||||||||||||
SMI Conservative Allocation Fund | $ | 237,500 | 1.82 | % | 26 | $ | 492 | $ | 750,000 | |||||||||||
SMI Dynamic Allocation Fund | 401,056 | 1.78 | % | 71 | 1,266 | 2,150,000 | ||||||||||||||
SMI Bond Fund | 91,667 | 1.73 | % | 3 | 32 | 150,000 |
* | Number of Days Outstanding represents the total days during the period ended April 30, 2016, that a Fund utilized the Line of Credit. |
NOTE 8. 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 9. BENEFICIAL OWNERSHIP
The beneficial ownership, either directly or indirectly, more than of 25% or more of the voting securities of a fund creates a presumption of control of the fund, under Section 2(a)(9) of the Investment Company Act of 1940. At April 30, 2016, National Financial Services Corporation (“NFS”) for the benefit of others, held 26%, 30%, 36% and 54% of the SMI Fund, SMI Conservative Allocation Fund, SMI Dynamic Allocation Fund and SMI Bond Fund, respectively. 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 Funds.
53
SMI FUNDS
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited), (Continued)
NOTE 10. FEDERAL TAX INFORMATION
At April 30, 2016, the net unrealized appreciation (depreciation) of investments for tax purposes was as follows:
SMI Fund | SMI Conservative Allocation Fund | SMI Dynamic Allocation Fund | SMI Bond Fund | SMI 50/40/10 Fund | ||||||||||||||||
Gross appreciation | $ | 5,317,762 | $ | — | $ | 921,964 | $ | 54,293 | $ | 98,151 | ||||||||||
Gross (depreciation) | (3,911,993 | ) | (312,772 | ) | (1,426,262 | ) | — | (147,740 | ) | |||||||||||
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Net appreciation (depreciation) on investments | $ | 1,405,769 | $ | (312,772 | ) | $ | (504,298 | ) | $ | 54,293 | $ | (49,589 | ) | |||||||
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Tax cost of investments | $ | 206,650,253 | $ | 19,935,174 | $ | 186,153,807 | $ | 7,943,749 | $ | 16,922,165 | ||||||||||
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The tax characterization of distributions for the fiscal year ended October 31, 2015, was as follows:
SMI Fund | SMI Conservative Allocation Fund | SMI Dynamic Allocation Fund | ||||||||||
2015 | 2015 | 2015 | ||||||||||
Distributions paid from:* | ||||||||||||
Ordinary income | $ | 1,347,114 | $ | 285,314 | $ | 3,044,706 | ||||||
Long-Term capital gain | 43,665,598 | 3,408,064 | 1,173,735 | |||||||||
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$ | 45,012,712 | $ | 3,693,378 | $ | 4,218,441 | |||||||
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SMI Bond Fund | SMI 50/40/10 Fund | |||||||
2015 | 2015 | |||||||
Distributions paid from:* | ||||||||
Ordinary income | $ | 2,420 | $ | — | ||||
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Total taxable distributions | $ | 2,420 | $ | — | ||||
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Tax return of capital | 540 | — | ||||||
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Total distributions paid | $ | 2,960 | $ | — | ||||
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* | For federal income tax purposes, distributions of short-term capital gains are treated as ordinary income distributions. |
54
SMI FUNDS
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited), (Continued)
NOTE 10. FEDERAL TAX INFORMATION – (Continued)
At October 31, 2015, the Funds’ most recent fiscal year end, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
SMI Fund | SMI Conservative Allocation Fund | SMI Dynamic Allocation Fund | ||||||||||
Accumulated undistributed ordinary income | $ | — | $ | 76,249 | $ | 1,049,699 | ||||||
Accumulated undistributed long-Term capital gains | 28,685,304 | 438,678 | — | |||||||||
Accumulated capital and other losses | (1,333,296 | ) | — | (3,298,781 | ) | |||||||
Unrealized appreciation (depreciation) | 1,774,037 | (428,263 | ) | (1,390,304 | ) | |||||||
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$ | 29,126,045 | $ | 86,664 | $ | (3,639,386 | ) | ||||||
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SMI Bond Fund | SMI 50/40/10 Fund | |||||||
Accumulated capital and other losses | $ | (27,322 | ) | $ | (730,568 | ) | ||
Unrealized appreciation (depreciation) | (43,156 | ) | (93,878 | ) | ||||
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$ | (70,478 | ) | $ | (824,446 | ) | |||
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At October 31, 2015, the difference between book basis and tax basis unrealized appreciation (depreciation) is attributable to the tax deferral of losses on wash sales.
For the tax year ended October 31, 2015, the following funds deferred late year ordinary losses of:
Qualified Late Year Ordinary Losses | ||||
SMI Fund | $ | 1,333,296 | ||
SMI 50/40/10 Fund | 4,088 |
NOTE 11. COMMITMENTS AND CONTIGENCIES
The Funds indemnify its officers and trustees for certain liabilities that may arise from performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred.
55
SMI FUNDS
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited), (Continued)
NOTE 12. SUBSEQUENT EVENT
Management of the Funds has evaluated the need for disclosures resulting from subsequent events through the date these financial statements were issued. Based upon this evaluation, management has determined there were no items requiring adjustment of the financial statements or additional disclosure.
56
INVESTMENT ADVISORY AGREEMENT
APPROVAL (Unaudited)
At a meeting held on December 8-9, 2015, the Board of Trustees (the “Board”) considered the renewal of the Investment Advisory Agreements (the “Agreements”) between the Valued Advisers Trust (the “Trust”) and SMI Advisory Services, LLC (the “Adviser” or “SMI”) with respect to the Sound Mind Investing Fund, the SMI Dynamic Allocation Fund, and the SMI Conservative Allocation Fund (the “Funds”). SMI provided written information to the Board to assist the Board in its considerations.
Counsel directed the trustees to a memorandum from his firm that summarized, among other things, the fiduciary duties and responsibilities of the Board in reviewing and approving the Agreements. The Board discussed the contractual arrangements between SMI and the Trust with respect to the Funds. They reflected upon the Board’s prior experience with SMI in managing the Funds, as well as their earlier discussion with representatives of SMI.
Trust 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 renewal of the Agreements, including the following material factors: (i) the nature, extent, and quality of the services to be provided by SMI; (ii) the investment performance of each of the Funds; (iii) the costs of the services to be provided and anticipated profits to be realized by SMI from the relationship with the Funds; (iv) the extent to which economies of scale would be realized if the Funds grow and whether advisory fee levels reflect those economies of scale for the benefit of the Funds’ investors; and (v) SMI’s practices regarding possible conflicts of interest and potential benefits derived from its relationship with the Funds.
In assessing these factors and reaching its decisions, 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 prepared and/or presented in connection with the annual renewal process, including information presented at the meeting. The Board requested and was provided with, and reflected on, information and reports relevant to the annual renewal of the Agreements, including: (i) reports regarding the services and support provided to the Funds and their shareholders by SMI; (ii) quarterly assessments of the investment performance of the Funds by personnel of SMI; (iii) commentary on the reasons for the performance; (iv) presentations by SMI addressing SMI’s investment philosophy, investment strategy, personnel and operations; (v) compliance and audit reports concerning the Funds and SMI; (vi) disclosure information contained in the registration statement of the Trust and the Form ADV of SMI; and (vii) a memorandum from counsel, that summarized the fiduciary duties and responsibilities of the Board in reviewing and approving the Agreements, including the material factors set forth above and the types of information included in each factor that should be considered by the Board in order to make an informed decision. The Board also requested and received various informational materials including, without limitation: (i) documents containing information about SMI, including financial information, a description of personnel and the services provided to the Funds, information on investment advice, performance, summaries of expenses of the Funds, compliance program, current legal matters, and other general information; (ii) comparative expense and performance information for other mutual funds with strategies similar to the Funds; and (iii) benefits to be realized by SMI from its relationship with the Funds. The Board did not identify any particular information that was most relevant to its consideration to approve the Agreements and each Trustee may have afforded different weight to the various factors.
57
INVESTMENT ADVISORY AGREEMENT
APPROVAL – (Unaudited), (Continued)
1. | The nature, extent, and quality of the services to be provided by the Adviser. In this regard, the Board considered SMI’s responsibilities under the Agreements. The trustees considered the services being provided by SMI to the Funds, 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 investment objectives and limitations, its coordination of services for the Funds among the service providers to the Funds and its efforts to promote the Funds and grow their assets. The trustees considered SMI’s continuity of, and commitment to retain, qualified personnel and SMI’s commitment to maintain and enhance its resources and systems. The trustees considered SMI’s personnel, including the education and experience of SMI’s personnel. The trustees also discussed the resignation of the sub-adviser to two of the Funds and the related change in strategy going forward. After considering the foregoing information and further information in the meeting materials provided by SMI (including SMI’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 SMI were satisfactory and adequate for the Funds. |
2. | Investment Performance of the Funds and the Adviser. In considering the investment performance of the Funds and SMI, the trustees compared the performance of the Funds with the performance of funds with similar objectives managed by other investment advisers, as well as with aggregated peer group data. The trustees also considered the consistency of SMI’s management of the Funds with each of the Fund’s investment objective, strategies, and limitations. The trustees noted that SMI did not manage accounts for clients with investment objectives similar to the Funds. The trustees noted and gave significant consideration to SMI’s view that the “upgrading” strategy utilized by the Sound Mind Investing Fund did not allow it to be appropriately compared to any particular peer category. The trustees observed that the Sound Mind Investing Fund outperformed compared to its peers for the one month and three month periods ended October 31, 2015, and underperformed for the year-to-date, one year and since inception periods. With respect to the SMI Conservative Allocation Fund, the trustees observed that the SMI Conservative Allocation Fund performed below the average and median performance measures for its peer category during the most recent year-to-date, one month, three month, and one-year measurement period but that it outperformed the average since the SMI Conservative Allocation Fund’s inception. The trustees noted that the equity portion of the SMI Conservative Allocation Fund utilized the “upgrading” strategy of the Sound Mind Investing Fund and that, as such, there was likely an impact on the performance of the SMI Conservative Allocation Fund. With respect to the SMI Dynamic Allocation Fund, the trustees noted that the SMI Dynamic Allocation Fund performed below the peer group for the year-to-date, one month, three month and one-year periods, and had performed above the median and average of the peer group for the period since the SMI Dynamic Allocation Fund’s inception. After reviewing and discussing the investment performance of the Funds further, SMI’s experience managing the Funds, and other relevant factors, the Board concluded, in light of all the facts and circumstances, that the investment performance of the Funds was acceptable. |
3. | The costs of the services to be provided and profits to be realized by the Adviser from the relationship with the Funds. In considering the costs of services to be provided and the profits to be realized by |
58
INVESTMENT ADVISORY AGREEMENT
APPROVAL – (Unaudited), (Continued)
SMI from the relationship with the Funds, the trustees considered: (1) SMI’s financial condition; (2) asset levels of the Funds; (3) the overall expenses of the Funds; and (4) the nature and frequency of advisory fee payments. The trustees reviewed information provided by SMI regarding its profits associated with managing the Funds. The trustees also considered potential benefits for SMI in managing the Funds. The trustees then compared the fees and expenses of the Funds (including the management fee) to other comparable mutual funds. The trustees noted that the Funds’ management fees tended to be toward the higher end of the range of mutual funds in their peer categories; noting in particular that that the management fee for the Sound Mind Investing Fund and the SMI Conservative Allocation Fund was above the average and median for each applicable peer category, and the management fee for the SMI Dynamic Allocation Fund was slightly higher than the average, but equal to the median for its peer category. The trustees also noted that the net fees for each of the Funds were below the average and median for the respective peer group. In light of the unique services rendered to the Funds by SMI, the view of SMI that the categorization with respect to the Sound Mind Investing Fund did not provide an appropriate peer group for a comparison, the profits realized by SMI in managing the Funds, and all other facts and circumstances they deemed relevant, the trustees concluded that the management fees paid by the Funds were fair and reasonable in relation to the nature and quality of the services provided by SMI. |
4. | The extent to which economies of scale would be realized as the Funds grow and whether advisory fee levels reflect these economies of scale for the benefit of the Funds’ investors. In this regard, the trustees considered the fee arrangements with SMI for the Funds. The Trustees considered that the management fee for each of the Funds had breakpoints that would allow shareholders to realize economies of scale as assets grow. The trustees noted that the Sound Mind Investing Fund and the SMI Dynamic Allocation Fund had realized these economies as a result of each Fund’s asset size during the past year, although the current asset levels of the Sound Mind Investing Fund and the SMI Dynamic Allocation Fund are below the first fee breakpoint. With respect to the SMI Conservative Allocation Fund, they noted that its asset base had not grown sufficiently to allow it to realize the economies of scale; however, the Board also noted the expense limitation arrangements in place with respect to each of the Funds, and that each Fund’s shareholders had experienced benefits from those arrangements. In light of its ongoing consideration of the asset levels of each of the Funds, expectations for growth, and fee levels, the Board determined that the fee arrangements for each of the Funds, in light of all the facts and circumstances, were fair and reasonable in relation to the nature and quality of the services provided by SMI. |
5. | Possible conflicts of interest and benefits to the Adviser. In considering SMI’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 Funds; the basis of decisions to buy or sell securities for the Funds; and the substance and administration of SMI’s code of ethics. The trustees also considered disclosure in the registration statement of the Trust relating to SMI’s potential conflicts of interest. The Board noted that SMI does not have any clients other than the five funds it advises within the Trust, and that SMI does not engage in soft dollar arrangements and has not identified any indirect benefits from its relationship with the Funds. Based on the |
59
INVESTMENT ADVISORY AGREEMENT
APPROVAL – (Unaudited), (Continued)
foregoing, the Board determined that SMI’s standards and practices relating to the identification and mitigation of potential conflicts of interest were satisfactory. |
After additional consideration of the factors delineated in the memorandum provided by counsel and further discussion among the Board members, the Board determined to approve the continuation of the Agreements between the Trust and the Adviser.
60
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 each 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 each 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 each 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.
61
PROXY VOTING
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities and information regarding how the Funds voted those proxies during the most recent twelve month period ended June 30 is available without charge upon request by (1) calling the Funds at (877) 764-3863 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
SMI Advisory Services, LLC
P.O. Box 547
Columbus, IN 47202
DISTRIBUTOR
Unified Financial Securities, LLC
9465 Counselors Row, Suite 200
Indianapolis, IN 46240
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 Pkwy, 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
225 Pictoria Drive Suite 450
Cincinnati, OH 45246
This report is intended only for the information of shareholders or those who have received the Funds prospectus which contains information about the Funds management fee and expenses. Please read the prospectus carefully before investing.
Distributed by Unified Financial Securities, LLC
Member FINRA/SIPC
62
SOUND MIND
INVESTING FUND (SMIFX)
SMI CONSERVATIVE ALLOCATION FUND (SMILX)
SMI DYNAMIC ALLOCATION FUND (SMIDX)
SMI BOND FUND (SMIUX)
SMI 50/40/10 FUND (SMIRX)
SEMI-ANNUAL REPORT |
APRIL 30, 2016 |
Fund Adviser:
SMI Advisory Services, LLC
P.O. BOX 547
Columbus, IN 47202
Toll Free (877) SMI-Fund
www.smifund.com
Semi-Annual Report
April 30, 2016
Fund Adviser:
Kovitz Investment Group Partners, LLC
115 South LaSalle Street, 27th Floor
Chicago, IL 60603
Toll Free (888) 695-3729
MANAGEMENT DISCUSSION OF FUND PERFORMANCE – (Unaudited)
Kovitz Investment Group Partners, LLC (the “Adviser”) launched the Green Owl Intrinsic Value Fund (the “Fund”) with the goal of seeking long-term capital appreciation through high risk-adjusted returns. Relying on a fundamental, research-driven process, the Fund strives to build a diversified portfolio of equity investments through the purchase of competitively advantaged and financially strong companies at prices substantially less than our estimate of their intrinsic values.
As long-term investors, our research process emphasizes the appraisal of factors that we believe matter most to a business’s long-term success. These include the quality of the business, the strength of the balance sheet, the predictability of the cash flows, and the ability of the management team to allocate capital intelligently and judiciously. We believe these attributes are the most reliable predictors of a company’s ability to maximize intrinsic value on a per share basis.
Broadly speaking, the Fund’s strategy is to own a relatively concentrated portfolio of the very best ideas we can find – essentially, undervalued stocks of companies with enduring competitive advantages that can generate sustainable free cash flow and have strong balance sheets. We can’t predict when the upside will come, but believe that a disciplined approach to security selection along with the patience to endure periods of underperformance may ultimately lead to more than satisfactory results.
We are confident that this strategy works over time. Quantitatively, paying a low price for a company relative to the cash flows generated skews the odds in the investor’s favor over a long period of time and produces a margin of safety if future results are worse than hoped for. Remember, while we believe the odds are skewed in the Fund’s favor, they are not 100%. The Fund will not outperform over every time period, but we believe adhering to a strategy of buying companies at prices that offer a margin of safety skews the odds in favor of the Fund outperforming over the majority of time periods and by a larger margin than when the Fund underperforms. Qualitatively (and counter-intuitively), the reason our investment strategy has historically tended to work is because not everyone can handle the fact that it doesn’t work all of the time. The emotional discomfort of deviating from the crowd is challenging for many managers to endure and sets the stage for our style of investing to continue to work over time.
Market and Performance Summary
From the financial crisis lows of early 2009 until the middle of 2015, the equity market experienced an exceptional, and an exceptionally calm, period as it marched steadily higher with little in the way of volatility. Since that time, however, market gyrations have reappeared with volatility increasing throughout the remainder of 2015 and thus far in 2016. For example, in an extreme case of Dr. Jekyll and Mr. Hyde syndrome, the U.S. equity markets first discounted (sold off) and then undiscounted (rallied) a recession all within just one quarter. With the market having been down as much as 10% before snapping back, sentiment turned from paranoia to complacency at seemingly breakneck speed.
As such, the first two quarters of the fiscal year could not have been more different as far as the Fund’s performance is concerned. During the first fiscal quarter, the Fund lost 9.55% followed by a 9.80% gain during the second quarter. Our primary benchmark, the S&P 500 decreased 6.18% and increased 7.05% during the first and second quarters, respectively. For the full six-month period ended April 30, 2016, the Fund lost 0.68% and the S&P 500 gained 0.43%. Since inception on December 28, 2011, the Fund has compounded at a rate of 11.84% annually, versus 14.35% annually for the S&P 500.
Performance Attribution
The individual positions that contributed the most to performance during the 6-month period were Quanta Services (PWR), Valmont Industries (VMI), Jacobs Engineering (JEC), CBS Corp. (CBS), and Berkshire Hathaway (BRKB).
1
The individual positions that detracted the most from performance during the period were Apple (AAPL), Bed Bath & Beyond (BBBY), Boeing (BA), Bank of America (BAC), and Citigroup (C).
On a sector basis, the combination of sector weighting and security selection in the Industrial sector as well as our relative lack of exposure to Healthcare benefitted the Fund the most during the period. The combination of the sector weighting and security selection in the Consumer Discretionary and Financial sectors, as well as our complete lack of exposure to Utilities and Telecom, detracted from the Fund’s performance the most.
Portfolio Activity
While we are long-term investors, we always seek to optimize the risk/return profile of the portfolio by changing the weightings of existing holdings, comparing current portfolio holdings with new investment opportunities, and making adjustments when appropriate. Volatility creates the opportunities to make these adjustments. By allocating capital away from more fully valued companies and adding capital to more discounted companies, we seek to reduce risk and improve both the Fund’s price-to-value ratio and the Fund’s long-term prospects.
The Fund had a fairly active six months. The market swoon in the early part of 2016 gave us the opportunity to initiate two positions and add to several others.
Portfolio activity during the period included the following:
• | Initiated positions in the following 2 companies; CBRE Group (CBG) and McKesson Corp. (MCK). |
• | Increased position sizes in the following 5 companies; American Express (AXP), Aon (AON), Bank of America, Harley Davidson (HOG), and Leucadia (LUK). |
• | Exited positions in the following 4 companies; Baker Hughes (BHI), Corning (GLW), Wal-Mart (WMT), and Viacom (VIAB). |
• | Decreased position sizes in the following 3 companies; Accenture (ACN), American International Group (AIG), and Coca Cola (KO). |
As of April 30, 2016, the Fund’s five largest positions were Berkshire Hathaway, Quanta, Jacobs, Apple, and Boeing, comprising 29% of the Fund’s assets.
We remain focused on the careful and patient application of our investment criteria and valuation requirements. We are more concerned with the risk of suffering a permanent loss of capital than about the risk of missing opportunities, especially those that are short-term in nature. Our bottom-up research emphasizes business quality, industry structures, growth opportunities, management skill and corporate culture. It is further augmented by our assessment of the company’s ability to sustain earnings power over the long haul through an understanding of its competitive advantages, business model, and management’s proficiency in the allocation of capital. We use absolute, rather than relative, methods to estimate companies’ intrinsic values and we use the movement of market prices around these intrinsic value estimates to construct and manage a portfolio of high-quality businesses that we believe have the potential to create sustained shareholder value over many years.
Thank you for your continued support and trust in our ability to manage your investment in the Fund.
2
INVESTMENT RESULTS – (Unaudited)
Total Returns*
(For the periods ended April 30, 2016)
Average Annual Returns | ||||||||||||
Six Months | One Year | Since Inception (December 22, 2011) (a) | ||||||||||
Green Owl Intrinsic Value Fund | -0.68 | % | -6.60 | % | 11.84 | % | ||||||
S&P 500® Index** | 0.43 | % | 1.21 | % | 14.35 | % |
Total annual operating expenses, as disclosed in the Fund’s prospectus dated February 29, 2016, were 1.37% of average daily net assets (1.10% after fee waivers/expense reimbursements by the Adviser). Effective January 1, 2016, the Adviser contractually agreed to waive or limit its fees and to assume other expenses of the Fund until February 28, 2018, so that the Total Annual Operating Expenses do not exceed 1.10%. 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. Additional information pertaining to the Fund’s expense ratios as of April 30, 2016 can be found in the financial highlights.
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. Current performance of the Fund may be lower or higher than the performance quoted. The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. Performance data current to the most recent month end may be obtained by calling 1-888-695-3729.
(a) | The Fund commenced operations on December 22, 2011. However, the Fund did not invest in long-term securities towards the investment objective until December 28, 2011. December 28, 2011 is the performance calculation inception date. |
* | Return figures reflect any change in price per share and assume the reinvestment of all distributions. |
** | The S&P 500® Index is a widely recognized unmanaged index of equity securities and is representative of a broader domestic equity market and range of securities than is found in the Fund’s portfolio. Individuals cannot invest directly in the Index; however, an individual can invest in exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index. |
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.
3
FUND HOLDINGS – (Unaudited)
1As | a percentage of net assets. |
The investment objective of the 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. The Fund’s Forms N-Q are available at the SEC’s website at www.sec.gov. The Fund’s Forms 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.
4
SUMMARY OF FUND EXPENSES – (Unaudited)
As a shareholder of the Fund, you incur 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 and held for the entire period from November 1, 2015 to April 30, 2016.
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” 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 ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second line of the table below is useful in comparing ongoing costs only and will not help you determine the relative costs of owning different funds.
Green Owl Intrinsic Value Fund | Beginning November 1, 2015 | Ending Account Value April 30, 2016 | Expenses Paid November 1, 2015 – | |||||||||
Actual | $ | 1,000.00 | $ | 993.20 | $ | 5.47 | ||||||
Hypothetical** | $ | 1,000.00 | $ | 1,019.37 | $ | 5.55 |
* | Expenses are equal to the Fund’s annualized expense ratio of 1.10%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). |
** | Assumes a 5% return before expenses. |
5
GREEN OWL INTRINSIC VALUE FUND
SCHEDULE OF INVESTMENTS
April 30, 2016 – (Unaudited)
Common Stocks – 98.14% | Shares | Fair Value | ||||||
Consumer Discretionary – 19.92% |
| |||||||
Bed Bath & Beyond, Inc. * | 34,125 | $ | 1,611,382 | |||||
CarMax, Inc. * | 28,240 | 1,495,308 | ||||||
CBS Corp. – Class B | 33,230 | 1,857,889 | ||||||
General Motors Co. | 70,600 | 2,245,080 | ||||||
Harley-Davidson, Inc. | 26,535 | 1,269,169 | ||||||
Kohl’s Corp. | 39,900 | 1,767,570 | ||||||
Walt Disney Co./The | 12,100 | 1,249,446 | ||||||
|
| |||||||
11,495,844 | ||||||||
|
| |||||||
Consumer Staples – 4.12% |
| |||||||
Coca-Cola Co./The | 12,470 | 558,656 | ||||||
CVS Health Corp. | 11,735 | 1,179,368 | ||||||
Walgreens Boots Alliance, Inc. | 8,075 | 640,186 | ||||||
|
| |||||||
2,378,210 | ||||||||
|
| |||||||
Energy – 5.42% |
| |||||||
FMC Technologies, Inc. * | 17,430 | 531,441 | ||||||
Halliburton Co. | 38,200 | 1,578,042 | ||||||
Noble Corp. PLC | 34,300 | 385,189 | ||||||
Schlumberger Ltd. | 7,895 | 634,284 | ||||||
|
| |||||||
3,128,956 | ||||||||
|
| |||||||
Financials – 34.76% |
| |||||||
American Express Co. | 29,400 | 1,923,642 | ||||||
American International Group, Inc. | 7,630 | 425,907 | ||||||
Aon PLC | 15,900 | 1,671,408 | ||||||
Bank of America Corp. | 172,175 | 2,506,868 | ||||||
Bank of New York Mellon Corp./The | 40,175 | 1,616,642 | ||||||
Berkshire Hathaway, Inc. – Class B * | 28,815 | 4,192,006 | ||||||
CBRE Group, Inc. * | 42,280 | 1,252,756 | ||||||
Citigroup, Inc. | 26,400 | 1,221,792 | ||||||
JPMorgan Chase & Co. | 36,230 | 2,289,736 | ||||||
Leucadia National Corp. | 80,485 | 1,342,490 | ||||||
Wells Fargo & Co. | 32,255 | 1,612,105 | ||||||
|
| |||||||
20,055,352 | ||||||||
|
| |||||||
Health Care – 1.22% |
| |||||||
McKesson Corp. | 4,200 | 704,844 | ||||||
|
| |||||||
Industrials – 23.54% |
| |||||||
American Airlines Group, Inc. (a) | 20,700 | 718,083 | ||||||
Boeing Co./The | 19,690 | 2,654,212 | ||||||
Jacobs Engineering Group, Inc. * | 79,141 | 3,528,106 | ||||||
Quanta Services, Inc. * | 153,955 | 3,651,813 |
See accompanying notes which are an integral part of these financial statements.
6
GREEN OWL INTRINSIC VALUE FUND
SCHEDULE OF INVESTMENTS – (continued)
April 30, 2016 – (Unaudited)
Common Stocks – 98.14% – continued | Shares | Fair Value | ||||||
Industrials – 23.54% – continued | ||||||||
United Parcel Service, Inc. – Class B | 11,520 | $ | 1,210,406 | |||||
Valmont Industries, Inc. | 12,953 | 1,818,342 | ||||||
|
| |||||||
13,580,962 | ||||||||
|
| |||||||
Information Technology – 9.16% |
| |||||||
Accenture PLC – Class A | 4,945 | 558,389 | ||||||
Alphabet, Inc. – Class A * | 773 | 547,191 | ||||||
Alphabet, Inc. – Class C * | 2,053 | 1,422,750 | ||||||
Apple, Inc. | 29,430 | 2,758,768 | ||||||
|
| |||||||
5,287,098 | ||||||||
|
| |||||||
TOTAL COMMON STOCKS (Cost $47,735,827) | 56,631,266 | |||||||
|
| |||||||
MONEY MARKET SECURITIES – 2.37% | ||||||||
Federated Treasury Obligations Fund – Service Shares, 0.01% (b) | 1,368,378 | 1,368,378 | ||||||
|
| |||||||
TOTAL MONEY MARKET SECURITIES (Cost $1,368,378) | 1,368,378 | |||||||
|
| |||||||
TOTAL INVESTMENTS – 100.51% (Cost $49,104,205) | 57,999,644 | |||||||
|
| |||||||
TOTAL WRITTEN CALL OPTIONS (Premiums Received $46,179) – (0.02)% | (8,850 | ) | ||||||
|
| |||||||
Liabilities in Excess of Other Assets – (0.49)% | (283,016 | ) | ||||||
|
| |||||||
NET ASSETS – 100.00% | $ | 57,707,778 | ||||||
|
|
(a) | All or a portion of this security is held as collateral for written call options. |
(b) | Rate disclosed is the seven day yield as of April 30, 2016. |
* | Non-income producing security. |
The sectors shown on the schedule of investments are based on the 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 Ultimus Asset Services, LLC.
See accompanying notes which are an integral part of these financial statements.
7
GREEN OWL INTRINSIC VALUE FUND
SCHEDULE OF WRITTEN OPTIONS
April 30, 2016 – (Unaudited)
Written Call Options – (0.02)% | Outstanding Contracts | Fair Value | ||||||
American Airlines Group, Inc./ January 2017/ Strike $50.00 (a) | (150 | ) | $ | (8,850 | ) | |||
|
| |||||||
Total Written Call Options (Premiums Received $46,179) | $ | (8,850 | ) | |||||
|
|
(a) | The call contract has a multiplier of 100 shares. |
See accompanying notes which are an integral part of these financial statements.
8
GREEN OWL INTRINSIC VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2016 – (Unaudited)
Assets | ||||
Investments in securities at fair value (cost $49,104,205) | $ | 57,999,644 | ||
Cash | 15,941 | |||
Receivable for fund shares sold | 701 | |||
Dividends receivable | 33,048 | |||
Prepaid expenses | 16,578 | |||
|
| |||
Total Assets | 58,065,912 | |||
|
| |||
Liabilities | ||||
Options written, at value (premium received $46,179) | 8,850 | |||
Payable for investments purchased | 287,995 | |||
Payable to Adviser | 33,053 | |||
Payable to administrator, fund accountant, and transfer agent | 16,779 | |||
Payable to custodian | 1,506 | |||
Payable to trustees | 397 | |||
Other accrued expenses | 9,554 | |||
|
| |||
Total Liabilities | 358,134 | |||
|
| |||
Net Assets | $ | 57,707,778 | ||
|
| |||
Net Assets consist of: | ||||
Paid-in capital | $ | 48,956,486 | ||
Accumulated undistributed net investment income | 50,734 | |||
Accumulated undistributed net realized loss from investment transactions | (232,210 | ) | ||
Net unrealized appreciation on: | ||||
Investment securities | 8,895,439 | |||
Written option contracts | 37,329 | |||
|
| |||
Net Assets | $ | 57,707,778 | ||
|
| |||
Shares outstanding | 3,993,950 | |||
|
| |||
Net asset value, offering and redemption price per share | $ | 14.45 | ||
|
|
See accompanying notes which are an integral part of these financial statements.
9
GREEN OWL INTRINSIC VALUE FUND
STATEMENT OF OPERATIONS
For the six months ended April 30, 2016 – (Unaudited)
Investment Income | ||||
Dividend income | $ | 426,313 | ||
|
| |||
Total investment income | 426,313 | |||
|
| |||
Expenses | ||||
Investment Adviser | 281,842 | |||
Administration | 22,005 | |||
Fund accounting | 12,474 | |||
Transfer agent | 19,681 | |||
Custodian | 4,992 | |||
Trustee | 2,621 | |||
Miscellaneous | 51,715 | |||
Line of credit | 1,253 | |||
|
| |||
Total expenses | 396,583 | |||
|
| |||
Fees waived by Adviser | (85,652 | ) | ||
|
| |||
Net operating expenses | 310,931 | |||
|
| |||
Net investment income | 115,382 | |||
|
| |||
Net Realized and Unrealized Loss on Investments |
| |||
Net realized loss on investment securities transactions | (213,713 | ) | ||
Net change in unrealized depreciation of investment securities | (487,695 | ) | ||
Net change in unrealized appreciation of written option contracts | 72,150 | |||
|
| |||
Net realized and unrealized loss on investments | (629,258 | ) | ||
|
| |||
Net decrease in net assets resulting from operations | $ | (513,876 | ) | |
|
|
See accompanying notes which are an integral part of these financial statements.
10
GREEN OWL INTRINSIC VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 2016 (Unaudited) | For the Year Ended October 31, 2015 | |||||||
Increase (Decrease) in Net Assets due to: | ||||||||
Operations | ||||||||
Net investment income | $ | 115,382 | $ | 302,919 | ||||
Net realized gain (loss) on investment transactions and written option contracts | (213,713 | ) | 968,969 | |||||
Net change in unrealized depreciation of investment securities transactions and written option contracts | (415,545 | ) | (1,647,258 | ) | ||||
|
|
|
| |||||
Net decrease in net assets resulting from operations | (513,876 | ) | (375,370 | ) | ||||
|
|
|
| |||||
Distributions | ||||||||
From net investment income | (241,645 | ) | (764,929 | ) | ||||
From net realized gains | (934,988 | ) | (2,314,248 | ) | ||||
|
|
|
| |||||
Total distributions | (1,176,633 | ) | (3,079,177 | ) | ||||
|
|
|
| |||||
Capital Transactions | ||||||||
Proceeds from shares sold | 3,932,712 | 10,031,283 | ||||||
Reinvestment of distributions | 1,113,919 | 2,937,926 | ||||||
Amount paid for shares redeemed | (4,966,604 | ) | (10,777,672 | ) | ||||
|
|
|
| |||||
Net increase in net assets resulting from capital transactions | 80,027 | 2,191,537 | ||||||
|
|
|
| |||||
Total Decrease in Net Assets | (1,610,482 | ) | (1,263,010 | ) | ||||
|
|
|
| |||||
Net Assets | ||||||||
Beginning of period | 59,318,260 | 60,581,270 | ||||||
|
|
|
| |||||
End of period | $ | 57,707,778 | $ | 59,318,260 | ||||
|
|
|
| |||||
Accumulated undistributed net investment income included in net assets at end of period | $ | 50,734 | $ | 176,997 | ||||
|
|
|
| |||||
Share Transactions | ||||||||
Shares sold | 279,727 | 654,165 | ||||||
Shares issued in reinvestment of distributions | 76,663 | 194,051 | ||||||
Shares redeemed | (360,838 | ) | (703,988 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares | (4,448 | ) | 144,228 | |||||
|
|
|
|
See accompanying notes which are an integral part of these financial statements.
11
GREEN OWL INTRINSIC VALUE FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding during each period)
For the Six Months Ended April 30, 2016 (Unaudited) | For the Year Ended October 31, 2015 | For the Year Ended October 31, 2014 | For the Year Ended October 31, 2013 | For the Period Ended October 31, 2012(a) | ||||||||||||||||
Selected Per Share Data: | ||||||||||||||||||||
Net asset value, beginning of period | $ | 14.84 | $ | 15.72 | $ | 14.99 | $ | 11.67 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Investment operations: | ||||||||||||||||||||
Net investment income | 0.03 | 0.08 | 0.19 | 0.02 | 0.02 | |||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.13 | ) | (0.16 | ) | 1.11 | 3.41 | 1.65 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | (0.10 | ) | (0.08 | ) | 1.30 | 3.43 | 1.67 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions to shareholders from: | ||||||||||||||||||||
Net investment income | (0.06 | ) | (0.20 | ) | (0.03 | ) | (0.05 | ) | – | |||||||||||
Net realized gains | (0.23 | ) | (0.60 | ) | (0.54 | ) | (0.06 | ) | – | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total distributions | (0.29 | ) | (0.80 | ) | (0.57 | ) | (0.11 | ) | – | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 14.45 | $ | 14.84 | $ | 15.72 | $ | 14.99 | $ | 11.67 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Return (b) | (0.68 | )%(c) | (0.60 | )% | 8.86 | % | 29.59 | % | 16.70 | %(c) | ||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000) | $ | 57,708 | $ | 59,318 | $ | 60,581 | $ | 47,129 | $ | 24,756 | ||||||||||
Ratio of net expenses to average net assets | 1.10 | %(d)(e) | 1.10 | %(e) | 1.11 | %(e) | 1.40 | %(e) | 1.41 | %(d)(e) | ||||||||||
Ratio of expenses to average net assets before waiver and reimbursement | 1.41 | %(d)(e) | 1.37 | %(e) | 1.38 | %(e) | 1.52 | %(e) | 2.11 | %(d)(e) | ||||||||||
Ratio of net investment income to average net assets | 0.41 | %(d) | 0.49 | % | 1.30 | % | 0.14 | % | 0.26 | %(d) | ||||||||||
Portfolio turnover rate | 10 | %(c) | 33 | % | 35 | % | 20 | % | 11 | %(c) |
(a) | For the period December 22, 2011 (commencement of operations) to October 31, 2012. |
(b) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of distributions. |
(c) | Not annualized. |
(d) | Annualized |
(e) | Includes 0.01%, less than 0.005%, 0.01%, less than 0.005%, and less than 0.005% for line of credit fees for 2012, 2013, 2014, 2015 and 2016, respectively. |
See accompanying notes which are an integral part of these financial statements.
12
GREEN OWL INTRINSIC VALUE FUND
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 – (Unaudited)
NOTE 1. ORGANIZATION
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 Board of Trustees (the “Board”) 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. The Fund’s investment adviser is Kovitz Investment Group Partners, LLC (the “Adviser”). On January 1, 2016, the Adviser, a wholly-owned subsidy of Focus Financial Partners, LLC, acquired Kovitz Investment Group, LLC (“Kovitz”), the Fund’s previous investment adviser. Prior to January 1, 2016, the Fund was managed by Kovitz pursuant to an investment advisory agreement. On March 16, 2016, a special meeting of shareholders was held, at which time, a new investment advisory agreement was approved. Information on this vote can be found in Note 12 (Proxy Voting Results). The investment objective of the Fund is to provide long-term capital appreciation.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board 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 polices are in conformity with generally accepted accounting principles in the United States of America (“GAAP”).
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.
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.
During the six months ended April 30, 2016, the Fund did not have a liability for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the Fund did not incur any interest or penalties.
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 (using procedures approved by the Board).
Security Transactions and Related Income – The Fund follows industry practice and records security transactions on the trade date for financial reporting purposes. The specific identification method is used for determining gains or losses for financial statements and income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Discounts and premiums on securities purchased are amortized or accreted using the effective interest method.
13
GREEN OWL INTRINSIC VALUE FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 – (Unaudited)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued
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 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 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 values per share of the Fund. There were no such material reclassifications made as of April 30, 2016.
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, or to the extent that some or all of the risk of the option has been offset by another option. When the Fund writes a covered call option, it maintains a segregated position within its account with its Custodian or as otherwise required by the rules of the exchange the underlying security, cash or liquid portfolio securities in an amount not less than the exercise price at all times while the option is outstanding. See Note 4 for additional disclosures.
The Fund will receive a premium from writing a call option, which increases the Fund’s return in the event the option expires unexercised or is closed out at a profit. The amount of the premium will reflect, among other things, the relationship of the market price of the underlying security to the exercise price of the option and the remaining term of the option. However, there is no assurance that a closing transaction can be affected at a favorable price. During the option period, the covered call writer has, in return for the premium received, given up the opportunity for capital appreciation above the exercise price should the market price of the underlying security increase, but has retained the risk of loss should the price of the underlying security decline.
The Fund may write put options on equity securities and futures contracts that the Fund is eligible to purchase to earn premium income or to assure a definite price for a security if it is considering acquiring the security at a lower price than the current market price or to close out options previously purchased. The Fund may not write a put option if, immediately thereafter, more than 25% of its net assets would be committed to such transactions. A put option gives the holder of the option the right to sell, and the writer has the obligation to buy, the underlying security at the exercise price at any time during the option period. The operation of put options in other respects is substantially identical to that of call options. When the Fund writes a put option, it maintains a segregated position within its account with the Custodian of cash or liquid portfolio securities in an amount not less than the exercise price at all times while the put option is outstanding.
The Fund will receive a premium from writing a put option, which increases the Fund’s return in the event the option expires unexercised or is closed out at a profit. The amount of the premium will reflect, among other
14
GREEN OWL INTRINSIC VALUE FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 – (Unaudited)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued
things, the relationship of the market price of the underlying security to the exercise price of the option and the remaining term of the option. The risks involved in writing put options include the risk that a closing transaction cannot be effected at a favorable price and the possibility that the price of the underlying security may fall below the exercise price, in which case the Fund may be required to purchase the underlying security at a higher price than the market price of the security at the time the option is exercised, resulting in a potential capital loss unless the security subsequently appreciates in value. During the six months ended April 30, 2016, the Fund utilized covered call options to extend the holding period to obtain long-term capital gain treatment and to take advantage of the option premium to garner a higher exit price than would have been available by immediately selling the stock.
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS
Fair value is defined as the price that the 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 established 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; for example, the risk inherent in a particular valuation technique used to measure fair value including items such as 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) |
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
15
GREEN OWL INTRINSIC VALUE FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 – (Unaudited)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – continued
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 by the Adviser, in conformity with policies adopted by and subject to review by the Board. These will generally be categorized as Level 3 securities.
Investments in open-end mutual funds, including money market mutual funds, are generally priced at the ending net asset value (NAV) provided by the pricing agent of the Fund. These securities are categorized as Level 1 securities.
Written option contracts that the Fund invests in are generally traded on an exchange. The options in which the Fund invests are generally valued at the last trade price as provided by a pricing service. If the last sale price is not available, the options will be valued at the mean of the last bid and ask prices. The options will generally be categorized as Level 1 securities. If the Fund decides that a price provided by the pricing service does not accurately reflect the fair value of the securities, when prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review of the Board. These securities will generally be categorized as Level 3 securities.
In accordance with the Trust’s valuation policies, 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 that the owner might reasonably expect to receive for them upon their current sale. Methods that are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market prices 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. Fair-value 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.
16
GREEN OWL INTRINSIC VALUE FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 – (Unaudited)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – continued
The following is a summary of the inputs used to value the Fund’s investments as of April 30, 2016:
Valuation Inputs | ||||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 56,631,266 | $ | – | $ | – | $ | 56,631,266 | ||||||||
Money Market Securities | 1,368,378 | – | – | 1,368,378 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 57,999,644 | $ | – | $ | – | $ | 57,999,644 | ||||||||
|
|
|
|
|
|
|
|
* Refer to the Schedule of Investments for industry classifications.
Valuation Inputs | ||||||||||||||||
Liabilities | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Written Options Contracts | $ | (8,850 | ) | $ | – | $ | – | $ | (8,850 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | (8,850 | ) | $ | – | $ | – | $ | (8,850 | ) | ||||||
|
|
|
|
|
|
|
|
The Fund did not hold any investments at any time during the reporting period for which after significant observable inputs (Level 2) were used in determining the fair value. The Fund did not hold any investments at any time during the reporting period for 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 during the reporting period.
NOTE 4. DERIVATIVE TRANSACTIONS
Call options written are presented separately on the Statement of Assets and Liabilities as a liability at fair value and on the Statement of Operations change in unrealized depreciation on written option contracts, respectively.
At April 30, 2016 :
Derivatives | Location of Derivatives on Statement of Assets & Liabilities | |||||
Equity Risk: | ||||||
Written Call Options | Options written, at value | $ | (8,850 | ) | ||
Equity Risk: | ||||||
Written Call Options | Net unrealized appreciation on written option contracts | $ | 37,329 |
17
GREEN OWL INTRINSIC VALUE FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 – (Unaudited)
NOTE 4. DERIVATIVE TRANSACTIONS – continued
For the six months ended April 30, 2016 :
Derivatives | Location of Gain (Loss) on Derivatives on Statement of Operations | Change in Unrealized Appreciation (Depreciation) on Derivatives | ||||
Equity Risk: | ||||||
Written Call Options | Net realized and unrealized gain on written option contracts | $ | 72,150 |
Transactions in written options by the Fund during the six months ended April 30, 2016, were as follows:
Number of Contracts | Premiums Received | |||||||
Options outstanding at October 31, 2015 | 150 | $ | 46,179 | |||||
Options written | – | – | ||||||
Options exercised | – | – | ||||||
Options closed | – | – | ||||||
|
|
|
| |||||
Options outstanding at April 30, 2016 | 150 | $ | 46,179 | |||||
|
|
|
|
NOTE 5. ADVISER FEES AND OTHER TRANSACTIONS
Under the terms of the management agreement, on behalf of the Fund (the “Agreement”), the Adviser manages the Fund’s investments subject to approval by the Board. Prior to January 1, 2016, Kovitz served as investment adviser subject to a separate management agreement. 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 1.00% of the average daily net assets of the Fund. For the six months ended April 30, 2016, the Adviser earned a fee of $281,842 from the Fund before the reimbursement described below. At April 30, 2016, the Fund owed the Adviser $33,053.
The Adviser, and Kovitz, previously, have contractually agreed to waive its management fee and/or reimburse expenses so that total annual fund operating 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, 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, do not exceed 1.10% of the Fund’s average daily net assets through February 28, 2018. The operating expense limitation also excludes any fees and expenses of acquired funds.
For the six months ended April 30, 2016, expenses totaling $85,652 were waived or reimbursed by the Adviser or Kovitz. Each waiver or reimbursement by the Adviser or Kovitz 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 or reimbursement occurred, provided that the Fund is able to make the repayment without exceeding the expense limitation in effect at the time of the waiver and any expense limitation in place at the time of repayment.
18
GREEN OWL INTRINSIC VALUE FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 – (Unaudited)
NOTE 5. ADVISER FEES AND OTHER TRANSACTIONS – continued
The amounts subject to repayment by the Adviser pursuant to the aforementioned conditions are as follows:
Amount | Recoverable through October 31, | |||
$ 40,437 | 2016 | |||
150,715 | 2017 | |||
162,284 | 2018 | |||
85,652 | 2019 |
The Trust retains Ultimus Asset Services, LLC (“Ultimus”), formerly Huntington Asset Services, Inc. (“HASI”) to provide the Fund with administration, accounting, transfer agent, and compliance services, including all regulatory reporting. For the six months ended April 30, 2016, Ultimus earned fees of $22,005 for administration services provided to the Fund. At April 30, 2016, Ultimus was owed $6,890 from the Fund for administration services.
For the six months ended April 30, 2016, Ultimus earned fees of $19,681 for transfer agent services to the Fund. At April 30, 2016, the Fund owed Ultimus $5,833 for transfer agent services. For the six months ended April 30, 2016, Ultimus earned fees of $12,474 from the Fund for fund accounting services. At April 30, 2016, Ultimus was owed $4,056 from the Fund for fund accounting services.
Certain officers and one Trustee of the Trust are employees of Ultimus. Unified Financial Securities, LLC (the “Distributor”), acts as the principal underwriter of the Fund’s shares, and Huntington National Bank is the custodian of the Fund’s assets (the “Custodian”). Effective at the close of business on December 31, 2015, Ultimus Fund Solutions, LLC acquired HASI and the Distributor from Huntington Bancshares, Inc. (“HBI”). Prior to January 1, 2016, the Custodian, HASI and the Distributor were under common control by HBI. For the six months ended April 30, 2016, the Custodian earned fees of $4,992 for custody services provided to the Fund. At April 30, 2016, the Custodian was owed $1,506 from the Fund for custody services. There were no payments made by the Fund to the Distributor during the six months ended April 30, 2016. An officer and Trustee of the Trust is an officer of the Distributor and such person may be deemed to be an affiliate of the Distributor.
During the six months ended April 30, 2016, the Fund paid $3,172 to Kovitz Securities, LLC, an affiliate of the Adviser, on the execution of purchases and sales of the Fund’s portfolio investments.
NOTE 6. LINE OF CREDIT
The Fund participates in a short-term credit agreement (“Line of Credit”) with Huntington expiring on September 7, 2016. Under the terms of the agreement, the Fund may borrow the lesser of $1,000,000 or 5% of the Fund’s daily market value at an interest rate of LIBOR plus 150 basis points. The purpose of the agreement is to meet temporary or emergency cash needs, including redemption requests that might otherwise require the
19
GREEN OWL INTRINSIC VALUE FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 – (Unaudited)
NOTE 6. LINE OF CREDIT – continued
untimely disposition of securities. As of April 30, 2016, the Fund had no outstanding borrowings under this Line of Credit.
Average Daily Loan Balance | Weighted Average Interest Rate | Number of Days Outstanding* | Interest Expense Incurred** | Maximum Loan Outstanding | ||||||||||||
$ 31,287 | 1.92 | % | 1 | $ | 2 | $ | 1,000,000 |
* | Number of Days Outstanding represents the total days during the six months ended April 30, 2016 that the Fund utilized the Line of Credit. |
** | Amount shown represents interest incurred on outstanding Line of Credit during the six months ended April 30, 2016. |
NOTE 7. PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 2016, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations, were as follows:
Purchases | ||||
U.S. Government Obligations | $ | – | ||
Other | 5,343,590 | |||
Sales | ||||
U.S. Government Obligations | $ | – | ||
Other | 5,826,165 |
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 1940 Act. At April 30, 2016, Charles Schwab & Co., Inc., for the benefit of its customers, owned 33.58% of the Fund. It is not known whether Charles Schwab 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 April 30, 2016, the net unrealized appreciation (depreciation) of investments, including written options, for tax purposes was as follows:
Gross Appreciation | $ | 10,736,786 | ||
Gross Depreciation | (1,822,512 | ) | ||
|
| |||
Net Appreciation on Investments | $ | 8,914,274 | ||
|
|
At April 30, 2016, the aggregate cost of securities for federal income tax purposes was $49,076,520.
20
GREEN OWL INTRINSIC VALUE FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 – (Unaudited)
NOTE 9. FEDERAL TAX INFORMATION – continued
The tax characterization of distributions for the fiscal year ended October 31, 2015 was as follows:
2015 | ||||
Distributions paid from: | ||||
Ordinary Income* | $ | 764,929 | ||
Long Term Capital Gains | 2,314,248 | |||
|
| |||
Total Distributions | $ | 3,079,177 | ||
|
|
* | Short term capital gain distributions are treated as ordinary income for tax purposes. |
At October 31, 2015, the components of distributable earnings on a tax basis were as follows:
Undistributed ordinary income | $ | 179,762 | ||
Undistributed long term capital gains | 934,985 | |||
Net unrealized appreciation (depreciation) | 9,329,819 | |||
Accumulated capital and other losses | (2,765 | ) | ||
|
| |||
$ | 10,441,801 | |||
|
|
As of October 31, 2015, the difference between book basis and tax basis unrealized appreciation/(depreciation) was primarily attributable to wash sales.
NOTE 10. 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 11. SUBSEQUENT EVENTS
Management of the Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date these financial statements were issued. There were no items requiring adjustment of financial statements or additional disclosure.
NOTE 12. PROXY VOTING RESULTS
On March 16, 2016, a special meeting of the shareholders of the Fund was held at the offices of the Trust for the purpose of approving a new investment advisory agreement with respect to the Fund between Kovitz Investment Group Partners, LLC and the Trust.
Below are the voting results for the Fund from the special meeting:
For | Against | Abstain | |||||||||||
2,174,282 | 1,903 | 0 |
21
OTHER INFORMATION
The Fund’s Statement of Additional Information (“SAI”) includes additional information about the trustees and is available without charge, upon request. You may call toll-free at (888) 695-3729 to request a copy of the SAI or to make shareholder inquiries.
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 is available without charge upon request by (1) calling the Fund at (888) 695-3729 and (2) from Fund documents filed with the Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov.
TRUSTEES
R. Jeffrey Young, Chairman
Ira Cohen
Andrea N. Mullins
OFFICERS
R. Jeffrey Young, Principal Executive Officer and President
John C. Swhear, Chief Compliance Officer, AML Officer and Vice President
Carol J. Highsmith, Vice President and Secretary
Matthew J. Miller, Vice President
Bryan W. Ashmus, Principal Financial Officer and Treasurer
INVESTMENT ADVISER
Kovitz Investment Group Partners, LLC
115 South LaSalle Street, 27th Floor
Chicago, IL 60603
DISTRIBUTOR
Unified Financial Securities, LLC
9465 Counselors Row, Suite 200
Indianapolis, IN 46240
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Cohen Fund Audit Services Ltd.
1350 Euclid Avenue, Suite 800
Cleveland, OH 44115
LEGAL COUNSEL
The Law Offices of John H. Lively & Associates, Inc.
A member firm of The 1940 Act Law GroupTM
11300 Tomahawk Creek Parkway, Ste. 310
Leawood, KS 66211
CUSTODIAN
Huntington National Bank
41 South High Street
Columbus, OH 43215
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT
Ultimus Asset Services, LLC
225 Pictoria Drive, Suite 450
Cincinnati, OH 45246
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
22
PRIVACY POLICY
The following is a description of the Fund’s policies regarding disclosure of nonpublic personal information that you provide to the Fund or that the Fund collects from other sources. In the event that you hold shares of the Fund through a broker-dealer or other financial intermediary, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared with nonaffiliated third parties.
Categories of Information the Fund Collects. The Fund collects the following nonpublic personal information about you:
• | Information the Fund receives from you on applications or other forms, correspondence, or conversations (such as your name, address, phone number, social security number, and date of birth); and |
• | Information about your transactions with the Fund, its affiliates, or others (such as your account number and balance, payment history, cost basis information, and other financial information). |
Categories of Information the Fund Discloses. The Fund does not disclose any nonpublic personal information about its current or former shareholders to unaffiliated third parties, except as required or permitted by law. The Fund is permitted by law to disclose all of the information it collects, as described above, to service providers (such as the Fund’s custodian, administrator, transfer agent, accountant and legal counsel) to process your transactions and otherwise provide services to you.
Confidentiality and Security. The Fund restricts access to your nonpublic personal information to those persons who require such information to provide products or services to you. The Fund maintains physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Disposal of Information. The Fund, through its transfer agent, has taken steps to reasonably ensure that the privacy of your nonpublic personal information is maintained at all times, including in connection with the disposal of information that is no longer required to be maintained by the Fund. Such steps shall include, whenever possible, shredding paper documents and records prior to disposal, requiring off-site storage vendors to shred documents maintained in such locations prior to disposal, and erasing and/or obliterating any data contained on electronic media in such a manner that the information can no longer be read or reconstructed.
BRC
Large Cap
Focus Equity Fund
Semi-Annual Report
April 30, 2016
Fund Adviser:
BRC Investment Management LLC
8400 East Prentice Avenue, Suite 1401
Greenwood Village, Colorado 80111
Toll Free (877) 272-1214
INVESTMENT RESULTS – (Unaudited)
Total Returns* (For the periods ended April 30, 2016) | ||||||||||||
Average Annual Returns | ||||||||||||
Six Months | One Year | Since Inception (December 21, 2012) | ||||||||||
BRC Large Cap Focus Equity Fund - Institutional Class | -6.88 | % | -7.47 | % | 11.13 | % | ||||||
S&P 500 Index®** | 0.43 | % | 1.21 | % | 13.60 | % |
Total annual operating expenses, as disclosed in the BRC Large Cap Focus Equity Fund (the “Fund”) prospectus dated February 29, 2016 were 1.54% of net assets for the Institutional Class (0.55% after fee waivers/expense reimbursements by BRC Investment Management LLC (the “Adviser”). The Adviser has contractually agreed to waive or limit its fees and to assume other expenses of the Fund until February 28, 2018, so that the Total Annual Fund Operating Expenses does not exceed 0.55%. 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. Additional information pertaining to the Fund’s expense ratios as of April 30, 2016 can be found in the financial highlights.
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. Current performance of the Fund may be lower or higher than the performance quoted. The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. Performance data current to the most recent month end may be obtained by calling (877) 272-1214.
* | Return figures reflect any change in price per share and assume the reinvestment of all distributions. |
** | The S&P 500® Index is a widely recognized unmanaged index of equity securities and is representative of a broader domestic equity market and range of securities than is found in the Fund’s portfolio. Individuals cannot invest directly in an 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.
1
FUND HOLDINGS – (Unaudited)
1 | As a percentage of net assets. |
The investment objective of the Fund is to seek long-term capital appreciation that will exceed the S&P 500® Index over a three-to-five year time horizon.
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 are available at the SEC’s website at www.sec.gov. The Fund’s Forms 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.
2
SUMMARY OF FUND 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 and held for the entire period from November 1, 2015 to April 30, 2016.
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” 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 ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second line of the table below is useful in comparing ongoing costs only and will not help you determine the relative costs of owning different funds.
BRC Large Cap Focus Equity Fund – Institutional Class | Beginning November 1, 2015 | Ending Account Value April 30, 2016 | Expenses Paid April 30, 2016 | |||||||||
Actual* | $ | 1,000.00 | $ | 931.20 | $ | 2.64 | ||||||
Hypothetical** | $ | 1,000.00 | $ | 1,022.13 | $ | 2.77 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.55%, multiplied by the average account value over the period, multiplied by 182/366. |
** | Assumes a 5% return before expenses. |
3
BRC LARGE CAP FOCUS EQUITY FUND
SCHEDULE OF INVESTMENTS
April 30, 2016 (Unaudited)
Common Stocks – 97.89% | Shares | Fair Value | ||||||
Consumer Discretionary – 15.45% | ||||||||
Carnival Corp. | 11,895 | $ | 583,450 | |||||
Home Depot, Inc./The | 5,298 | 709,349 | ||||||
Leggett & Platt, Inc. | 13,817 | 681,040 | ||||||
McDonald’s Corp. | 5,366 | 678,745 | ||||||
O’Reilly Automotive, Inc. * | 2,166 | 568,965 | ||||||
|
| |||||||
3,221,549 | ||||||||
|
| |||||||
Consumer Staples – 5.43% | ||||||||
Constellation Brands, Inc. – Class A | 3,973 | 620,026 | ||||||
Kroger Co./The | 14,511 | 513,544 | ||||||
|
| |||||||
1,133,570 | ||||||||
|
| |||||||
Energy – 4.87% | ||||||||
Marathon Petroleum Corp. | 13,147 | 513,785 | ||||||
Valero Energy Corp. | 8,519 | 501,514 | ||||||
|
| |||||||
1,015,299 | ||||||||
|
| |||||||
Financials – 16.97% | ||||||||
Cincinnati Financial Corp. | 9,681 | 639,043 | ||||||
CME Group, Inc. | 6,014 | 552,747 | ||||||
East West Bancorp, Inc. | 16,400 | 614,836 | ||||||
Everest Re Group Ltd. | 3,085 | 570,417 | ||||||
NASDAQ OMX Group, Inc. | 9,368 | 578,099 | ||||||
Synchrony Financial | 19,072 | 583,031 | ||||||
|
| |||||||
3,538,173 | ||||||||
|
| |||||||
Health Care – 12.58% | ||||||||
Baxter International, Inc. | 17,082 | 755,366 | ||||||
Bristol-Myers Squibb Co. | 9,547 | 689,102 | ||||||
Gilead Sciences, Inc. | 6,059 | 534,464 | ||||||
Quintiles Transnational Holdings, Inc. * | 9,323 | 643,940 | ||||||
|
| |||||||
2,622,872 | ||||||||
|
| |||||||
Industrials – 14.73% | ||||||||
FedEx Corp. | 3,740 | 617,511 | ||||||
General Dynamics Corp. | 4,270 | 600,020 | ||||||
ManpowerGroup, Inc. | 7,669 | 590,743 | ||||||
Spirit AeroSystems Holdings, Inc. * | 11,761 | 554,531 | ||||||
United Technologies Corp. | 6,797 | 709,403 | ||||||
|
| |||||||
3,072,208 | ||||||||
|
|
See accompanying notes which are an integral part of these financial statements.
4
BRC LARGE CAP FOCUS EQUITY FUND
SCHEDULE OF INVESTMENTS – (continued)
April 30, 2016 (Unaudited)
Common Stocks – 97.89% – continued | Shares | Fair Value | ||||||
Information Technology – 15.88% | ||||||||
Applied Materials, Inc. | 30,193 | $ | 618,051 | |||||
Arrow Electronics, Inc. * | 10,061 | 624,788 | ||||||
Facebook, Inc. – Class A | 6,126 | 720,295 | ||||||
Fiserv, Inc. * | 6,864 | 670,750 | ||||||
Vantiv, Inc. – Class A * | 12,431 | 677,987 | ||||||
|
| |||||||
3,311,871 | ||||||||
|
| |||||||
Materials – 6.10% | ||||||||
Crown Holdings, Inc. * | 12,185 | 645,318 | ||||||
Sealed Air Corp. | 13,236 | 626,857 | ||||||
|
| |||||||
1,272,175 | ||||||||
|
| |||||||
Telecommunication Services – 2.72% | ||||||||
Verizon Communications, Inc. | 11,134 | 567,166 | ||||||
|
| |||||||
Utilities – 3.16% | ||||||||
CMS Energy Corp. | 16,187 | 658,487 | ||||||
|
| |||||||
Total Common Stocks (Cost $19,534,269) | 20,413,370 | |||||||
|
| |||||||
Money Market Securities – 2.71% | ||||||||
Fidelity Institutional Money Market Portfolio – Institutional Class, 0.37% (a) | 565,856 | 565,856 | ||||||
|
| |||||||
Total Money Market Securities (Cost $565,856) | 565,856 | |||||||
|
| |||||||
Total Investments – 100.60% (Cost $20,100,125) | 20,979,226 | |||||||
|
| |||||||
Liabilities in Excess of Other Assets – (0.60)% | (124,729) | |||||||
|
| |||||||
NET ASSETS – 100.00% | $ | 20,854,497 | ||||||
|
|
(a) | Rate disclosed is the seven day yield as of April 30, 2016. |
* | Non-income producing security. |
The sectors shown on the schedule of investments are based on the 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 Ultimus Asset Services, LLC.
See accompanying notes which are an integral part of these financial statements.
5
BRC LARGE CAP FOCUS EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2016 (Unaudited)
Assets | ||||
Investments in securities at fair value (cost $20,100,125) | $ | 20,979,226 | ||
Receivable for investments sold | 488,752 | |||
Dividends receivable | 13,316 | |||
Receivable from Adviser | 6,196 | |||
Prepaid expenses | 12,517 | |||
|
| |||
Total Assets | 21,500,007 | |||
|
| |||
Liabilities | ||||
Payable for fund shares redeemed | 9,975 | |||
Payable for investments purchased | 605,750 | |||
Payable to administrator, fund accountant, and transfer agent | 13,895 | |||
Payable to custodian | 726 | |||
Payable to trustees | 971 | |||
Other accrued expenses | 14,193 | |||
|
| |||
Total Liabilities | 645,510 | |||
|
| |||
Net Assets | $ | 20,854,497 | ||
|
| |||
Net Assets consist of: | ||||
Paid-in capital | $ | 21,248,572 | ||
Accumulated undistributed net investment income | 70,519 | |||
Accumulated undistributed net realized loss from investment transactions | (1,343,695 | ) | ||
Net unrealized appreciation on investments | 879,101 | |||
|
| |||
Net Assets | $ | 20,854,497 | ||
|
| |||
Institutional Class: | ||||
Shares outstanding (unlimited number of shares authorized, no par value) | 1,666,527 | |||
|
| |||
Net asset value, offering and redemption price per share | $ | 12.51 | ||
|
|
See accompanying notes which are an integral part of these financial statements.
6
BRC LARGE CAP FOCUS EQUITY FUND
STATEMENT OF OPERATIONS
For the six months ended April 30, 2016 (Unaudited)
Investment Income | ||||
Dividend income | $ | 175,459 | ||
|
| |||
Total investment income | 175,459 | |||
|
| |||
Expenses | ||||
Investment Adviser | 48,615 | |||
Administration | 17,035 | |||
Fund accounting | 12,432 | |||
Transfer agent | 18,055 | |||
Legal | 8,736 | |||
Registration | 13,319 | |||
Custodian | 5,370 | |||
Audit | 7,956 | |||
Trustee | 2,659 | |||
Pricing | 1,290 | |||
Report printing | 7,151 | |||
Miscellaneous | 8,457 | |||
|
| |||
Total expenses | 151,075 | |||
|
| |||
Fees waived and expenses reimbursed by Adviser | (94,258 | ) | ||
|
| |||
Net operating expenses | 56,817 | |||
|
| |||
Net investment income | 118,642 | |||
|
| |||
Net Realized and Unrealized Loss on Investments | ||||
Net realized loss on investment securities transactions | (1,340,782 | ) | ||
Net change in unrealized depreciation of investment securities | (290,117 | ) | ||
|
| |||
Net realized and unrealized loss on investments | (1,630,899 | ) | ||
|
| |||
Net decrease in net assets resulting from operations | $ | (1,512,257 | ) | |
|
|
See accompanying notes which are an integral part of these financial statements.
7
BRC LARGE CAP FOCUS EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 2016 (Unaudited) | For the Year Ended October 31, 2015 | |||||||
Increase (Decrease) in Net Assets due to: | ||||||||
Operations | ||||||||
Net investment income | $ | 118,642 | $ | 152,665 | ||||
Net realized gain (loss) on investment securities transactions | (1,340,782 | ) | 988,555 | |||||
Net change in unrealized (depreciation) of investment securities | (290,117 | ) | (7,613 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | (1,512,257 | ) | 1,133,607 | |||||
|
|
|
| |||||
Distributions | ||||||||
From net investment income | (159,223 | ) | (123,164 | ) | ||||
From net realized gains | (999,395 | ) | (1,011,562 | ) | ||||
|
|
|
| |||||
Total distributions | (1,158,618 | ) | (1,134,726 | ) | ||||
|
|
|
| |||||
Capital Transactions – Institutional Class | ||||||||
Proceeds from shares sold | 3,539,009 | 7,750,302 | ||||||
Reinvestment of distributions | 808,156 | 823,845 | ||||||
Amount paid for shares redeemed | (2,806,929 | ) | (2,711,888 | ) | ||||
|
|
|
| |||||
Net increase in net assets resulting from capital transactions | 1,540,236 | 5,862,259 | ||||||
|
|
|
| |||||
Total Increase (Decrease) in Net Assets | (1,130,639 | ) | 5,861,140 | |||||
|
|
|
| |||||
Net Assets | ||||||||
Beginning of period | 21,985,136 | 16,123,996 | ||||||
|
|
|
| |||||
End of period | $ | 20,854,497 | $ | 21,985,136 | ||||
|
|
|
| |||||
Accumulated undistributed net investment income included in net assets at end of period | $ | 70,519 | $ | 111,100 | ||||
|
|
|
| |||||
Share Transactions – Institutional Class | ||||||||
Shares sold | 270,425 | 549,368 | ||||||
Shares issued in reinvestment of distributions | 62,118 | 59,742 | ||||||
Shares redeemed | (217,829 | ) | (190,932 | ) | ||||
|
|
|
| |||||
Net increase in shares | 114,714 | 418,178 | ||||||
|
|
|
|
See accompanying notes which are an integral part of these financial statements.
8
BRC LARGE CAP FOCUS EQUITY FUND
FINANCIAL HIGHLIGHTS – INSTITUTIONAL CLASS
(For a share outstanding during each period)
For the Six Months Ended April 30, 2016 (Unaudited) | For the Year Ended October 31, 2015 | For the Year Ended October 31, 2014 | For the Period Ended October 31, 2013 (a) | |||||||||||||
Selected Per Share Data: | ||||||||||||||||
Net asset value, beginning of period | $ | 14.17 | $ | 14.22 | $ | 12.38 | $ | 10.00 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Investment Operations: | ||||||||||||||||
Net investment income | 0.07 | 0.11 | 0.11 | 0.05 | ||||||||||||
Net realized and unrealized gain (loss) on investments | (1.02 | ) | 0.85 | 1.81 | 2.33 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total from investment operations | (0.95 | ) | 0.96 | 1.92 | 2.38 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Less distributions to shareholders from: |
| |||||||||||||||
Net investment income | (0.10 | ) | (0.11 | ) | (0.08 | ) | – | |||||||||
Net realized gains | (0.61 | ) | (0.90 | ) | – | (b) | – | |||||||||
|
|
|
|
|
|
|
| |||||||||
Total distributions | (0.71 | ) | (1.01 | ) | (0.08 | ) | – | |||||||||
|
|
|
|
|
|
|
| |||||||||
Net asset value, end of period | $ | 12.51 | $ | 14.17 | $ | 14.22 | $ | 12.38 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Return (c) | (6.88 | )%(d) | 6.95 | % | 15.60 | % | 23.80 | %(d) | ||||||||
Ratios and Supplemental Data: | ||||||||||||||||
Net assets, end of period (000) | $ | 20,854 | $ | 21,985 | $ | 16,124 | $ | 8,112 | ||||||||
Ratio of net expenses to average net assets | 0.55 | %(e) | 0.55 | % | 0.55 | % | 0.56 | %(e) | ||||||||
Ratio of expenses to average net assets before waiver and reimbursement | 1.46 | %(e) | 1.54 | % | 2.03 | % | 6.49 | %(e) | ||||||||
Ratio of net investment income to average net assets | 1.15 | %(e) | 0.81 | % | 0.90 | % | 0.98 | %(e) | ||||||||
Portfolio turnover rate | 94 | %(d) | 232 | % | 192 | % | 154 | %(d) |
(a) | For the period December 21, 2012 (commencement of operations) to October 31, 2013. |
(b) | Amount is less than $0.005. |
(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 distributions. |
(d) | Not annualized. |
(e) | Annualized. |
See accompanying notes which are an integral part of these financial statements.
9
BRC LARGE CAP FOCUS EQUITY FUND
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2016 (Unaudited)
NOTE 1. ORGANIZATION
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 Trust 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 commenced operations December 21, 2012. The Fund’s investment adviser is BRC Investment Management LLC (the “Adviser”). The investment objective of the Fund is to seek long-term capital appreciation that will exceed the S&P 500® Index over a three-to five-year time horizon.
The Fund is authorized to offer two classes of shares: Institutional Class and Advisor Class. Each share represents an equal proportionate interest in the assets and liabilities belonging to the Fund and is entitled to such dividends and distributions out of income belonging to the applicable class as are declared by the Board. Expenses attributable to any class are borne by that class. Income, expenses, and realized and unrealized gains/losses are allocated to the respective classes on the basis of relative daily net assets. On matters that affect the Fund as a whole, each class has the same voting and other rights and preferences as any other class. On matters that affect only one class, only shareholders of that class may vote. Each class votes separately on matters affecting only that class, or on matters expressly required to be voted on separately by state or federal law. Shares of each class of a series have the same voting and other rights and preferences as the other classes and series of the Trust for matters that affect the Trust as a whole. As of April 30, 2016, only Institutional Class shares have commenced operations. The Fund may offer additional classes of shares in the future.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board 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”).
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.
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.
During the period ended April 30, 2016, the Fund did not have a liability for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period, the Fund did not incur any interest or penalties.
10
BRC LARGE CAP FOCUS EQUITY FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 (Unaudited)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued
Expenses – Expenses incurred by the Trust that do not relate to a specific fund of the Trust are allocated to the individual funds based on each fund’s relative net assets or other appropriate basis (using procedures approved by the Board).
Security Transactions and Related Income – The Fund follows industry practice and records security transactions on the trade date for financial reporting purposes. The specific identification accounting method is used for determining gains or losses for financial statements and income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Discounts and premiums on securities purchased are amortized or accreted using the effective interest method.
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 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 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 among the components of net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications have no effect on net assets, results of operations or net asset values per share of the Fund. There were no such material reclassifications made as of April 30, 2016.
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS
Fair value is defined as the price that the Fund would receive upon selling an investment in a orderly transaction to an independent buyer in the principal or most advantageous market of the investment. GAAP established 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, (ex., the risk inherent in a particular valuation technique used to measure fair value including items such as 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 |
11
BRC LARGE CAP FOCUS EQUITY FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 (Unaudited)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – continued
• | 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 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 at the last quoted sale price. Lacking a last sale price, an exchange traded security is generally valued at its last bid price. Securities traded in the NASDAQ over-the-counter market are generally valued at the NASDAQ Official Closing Price. When using the market quotations or close prices provided by the pricing service and when the market is considered active, the security is classified as a Level 1 security. Sometimes, an equity security owned by the Fund will be valued by the pricing service with factors other than market quotations or when the market is considered inactive. When this happens, the security is classified as a Level 2 security. When market quotations are not readily available, when the Fund determines that the market quotation or the price provided by the pricing service does not accurately reflect the current fair value, or when restricted or illiquid securities are being valued, such securities are valued as determined in good faith by the Fund, in conformity with policies adopted by and subject to review by the Board. These securities are generally categorized as Level 3 securities.
Investments in open-end mutual funds, including money market mutual funds, are generally priced at the ending net asset value (NAV) provided by the pricing agent of the Fund. These securities will be categorized as Level 1 securities.
In accordance with the Trust’s valuation policies, 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 the owner might reasonably expect to receive for them upon their current sale. Methods that are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market prices 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. Fair-value 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. Any fair value pricing done outside the Fund’s approved pricing methods must be approved by the Pricing Committee of the Board.
12
BRC LARGE CAP FOCUS EQUITY FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 (Unaudited)
NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – continued
The following is a summary of the inputs used to value the Fund’s investments as of April 30, 2016:
Valuation Inputs | ||||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 20,413,370 | $ | – | $ | – | $ | 20,413,370 | ||||||||
Money Market Securities | 565,856 | – | – | 565,856 | ||||||||||||
Total | $ | 20,979,226 | $ | – | $ | – | $ | 20,979,226 |
* | Refer to the Schedule of Investments for industry classifications. |
The Fund did not hold any investments at any time during the reporting period for which after significant observable inputs (Level 2) were used in determining fair value. The Fund did not hold any investments at any time during the reporting period for 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 during the reporting period.
NOTE 4. ADVISER FEES AND OTHER TRANSACTIONS
Under the terms of the management agreement, on behalf of the Fund (the “Agreement”), the Adviser manages the Fund’s investments subject to approval 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 0.47% of the average daily net assets of the Fund. For the period ended April 30, 2016, the Adviser earned a fee of $48,615 from the Fund before the reimbursement described below.
The Adviser has contractually agreed to waive or limit its management fees and to assume other expenses of the Fund until February 28, 2018, so that Total Annual Fund Operating 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, and expenses that the Fund has incurred but did not actually pay because of an expense offset or brokerage/service arrangement, if applicable, incurred by the Fund in any fiscal year, do not exceed 0.55% of the Fund’s average daily net assets. Each fee waiver or expense reimbursement by the Adviser is subject to recoupment by the Fund within the three fiscal years following the fiscal year in which the expense was incurred, provided total expenses do not exceed the limitation in place at the time the waiver reimbursement occurred. For the period ended April 30, 2016, fees and expenses totaling $94,258 were waived or reimbursed by the Adviser and may be subject to potential recoupment by the Adviser until October 31, 2019. At April 30, 2016, the Adviser owed the Fund $6,196.
The amount subject to recoupment by the Adviser pursuant to the aforementioned conditions are as follows:
Amount | Recoverable through October 31, | |||
$198,220 | 2016 | |||
185,217 | 2017 | |||
187,701 | 2018 | |||
94,258 | 2019 |
13
BRC LARGE CAP FOCUS EQUITY FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 (Unaudited)
NOTE 4. ADVISER FEES AND OTHER TRANSACTIONS – continued
The Trust retains Ultimus Asset Services, LLC (“Ultimus”), formerly Huntington Asset Services, Inc. (“HASI”), to provide the Fund with administration, accounting, transfer agent, and compliance services, including all regulatory reporting. For the period ended April 30, 2016, Ultimus earned fees of $17,035 for administration services provided to the Fund. At April 30, 2016, Ultimus was owed $4,535 from the Fund for administration services.
For the period ended April 30, 2016, Ultimus earned fees of $18,055 for transfer agent services to the Fund. At April 30, 2016, the Fund owed Ultimus $5,261 for transfer agent services. For the period ended April 30, 2016, Ultimus earned fees of $12,432 from the Fund for fund accounting services. At April 30, 2016, Ultimus was owed $4,099 from the Fund for fund accounting services.
Certain officers and one Trustee of the Trust are employees of Ultimus. Unified Financial Securities, LLC (the “Distributor”) acts as the principal distributor of the Fund’s shares. Huntington National Bank is the custodian of the Fund’s investments (the “Custodian”). Effective at the close of business on December 31, 2015, Ultimus Fund Solutions, LLC acquired HASI and the Distributor from Huntington Bancshares, Inc. (“HBI”). Prior to January 1, 2016, the Custodian, HASI and the Distributor were under common control by HBI. For the period ended April 30, 2016, the Custodian earned fees of $5,370 for custody services provided to the Fund. At April 30, 2016, the Custodian was owed $726 from the Fund for custody services.
NOTE 5. PURCHASES AND SALES OF SECURITIES
For the period ended April 30, 2016, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations, were as follows:
Purchases | ||||
U.S. Government Obligations | $ | – | ||
Other | 20,140,440 | |||
Sales | ||||
U.S. Government Obligations | $ | – | ||
Other | 19,223,972 |
NOTE 6. 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 1940 Act. At April 30, 2016, Charles Schwab & Co., Inc. for the benefit of its customers, owned 54.76% and Band & Co. owned 27.95%. It is not known whether Charles Schwab & Co., Band & Co., or any of the underlying beneficial owners controlled 25% or more of the voting securities of the Fund.
NOTE 7. FEDERAL TAX INFORMATION
At April 30, 2016, the net unrealized appreciation (depreciation) of investments for tax purposes was as follows:
Gross Appreciation | $ | 1,428,092 | ||
Gross (Depreciation) | (551,902 | ) | ||
|
| |||
Net Appreciation on Investments | $ | 876,190 | ||
|
|
14
BRC LARGE CAP FOCUS EQUITY FUND
NOTES TO THE FINANCIAL STATEMENTS – (continued)
April 30, 2016 (Unaudited)
NOTE 7. FEDERAL TAX INFORMATION – continued
At April 30, 2016, the aggregate cost of securities for federal income tax purposes was $20,103,036 for the Fund.
The tax characterization of distributions for the fiscal year ended October 31, 2015 was as follows:
2015 | ||||
Distributions paid from: | ||||
Ordinary income* | $ | 600,944 | ||
Long-Term Capital Gain | 533,783 | |||
|
| |||
$ | 1,134,727 | |||
|
|
*Short-term | capital gain distributions are treated as ordinary income for tax purposes. |
At October 31, 2015, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Undistributed ordinary income | $ | 446,341 | ||
Undistributed long-term capital gains | 664,152 | |||
Net unrealized appreciation (depreciation) | 1,166,307 | |||
|
| |||
$ | 2,276,800 | |||
|
|
At October 31, 2015, the difference between book basis and tax basis unrealized appreciation (depreciation) is primarily attributable to wash sales.
At October 31, 2015, for federal income tax purposes, the Fund had no capital loss carryforwards.
NOTE 8. COMMITMENTS AND CONTINGENCIES
The Fund indemnifies its officers and trustees for certain liabilities that may arise from the 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 9. SUBSEQUENT EVENTS
Management of the Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date these financial statements were issued. There were no items requiring adjustment of the financial statements or additional disclosure.
15
OTHER INFORMATION
The Fund’s Statement of Additional Information (“SAI”) includes additional information about the trustees and is available without charge, upon request. You may call toll-free at (877) 272-1214 to request a copy of the SAI or to make shareholder inquiries.
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 is available without charge upon request by (1) calling the Fund at (877) 272-1214 and (2) from Fund documents filed with the Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov.
TRUSTEES
R. Jeffrey Young, Chairman
Ira Cohen
Andrea N. Mullins
OFFICERS
R. | Jeffrey Young, Principal Executive Officer and President |
John | C. Swhear, Chief Compliance Officer, AML Officer and Vice President |
Carol | J. Highsmith, Vice President and Secretary |
Matthew | J. Miller, Vice President |
Bryan | W. Ashmus, Principal Financial Officer and Treasurer |
INVESTMENT ADVISER
BRC | Investment Management LLC |
8400 | East Prentice Avenue, Suite 1401 |
Greenwood | Village, Colorado 80111 |
DISTRIBUTOR
Unified Financial Securities, LLC
9465 Counselors Row, Suite 200
Indianapolis, IN 46240
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Cohen | Fund Audit Services Ltd. |
1350 | Euclid Avenue, Suite 800 |
Cleveland, | OH 44115 |
LEGAL COUNSEL
The | Law Offices of John H. Lively & Associates, Inc. |
A | member firm of The 1940 Act Law GroupTM |
11300 | Tomahawk Creek Parkway, Ste. 310 |
Leawood, | KS 66211 |
CUSTODIAN
Huntington National Bank
41 South High Street
Columbus, OH 43215
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT
Ultimus Asset Services, LLC
225 Pictoria Drive, Suite 450
Cincinnati, OH 45246
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
16
PRIVACY POLICY
The following is a description of the Fund’s policies regarding disclosure of nonpublic personal information that you provide to the Fund or that the Fund collects from other sources. In the event that you hold shares of the Fund through a broker-dealer or other financial intermediary, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared with nonaffiliated third parties.
Categories of Information the Fund Collects. The Fund collects the following nonpublic personal information about you:
• | Information the Fund receives from you on applications or other forms, correspondence, or conversations (such as your name, address, phone number, social security number, and date of birth); and |
• | Information about your transactions with the Fund, its affiliates, or others (such as your account number and balance, payment history, cost basis information, and other financial information). |
Categories of Information the Fund Discloses. The Fund does not disclose any nonpublic personal information about its current or former shareholders to unaffiliated third parties, except as required or permitted by law. The Fund is permitted by law to disclose all of the information it collects, as described above, to service providers (such as the Fund’s custodian, administrator, transfer agent, accountant and legal counsel) to process your transactions and otherwise provide services to you.
Confidentiality and Security. The Fund restricts access to your nonpublic personal information to those persons who require such information to provide products or services to you. The Fund maintains physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Disposal of Information. The Fund, through its transfer agent, has taken steps to reasonably ensure that the privacy of your nonpublic personal information is maintained at all times, including in connection with the disposal of information that is no longer required to be maintained by the Fund. Such steps shall include, whenever possible, shredding paper documents and records prior to disposal, requiring off-site storage vendors to shred documents maintained in such locations prior to disposal, and erasing and/or obliterating any data contained on electronic media in such a manner that the information can no longer be read or reconstructed.
Semi-Annual Report
April 30, 2016
|
Foundry Partners Fundamental Small Cap Value Fund
(Formerly the Dreman Contrarian Small Cap Value Fund)
Fund Adviser:
Foundry Partners, LLC
510 First Avenue North, Suite 409
Minneapolis, MN 55403
Investment Results – (Unaudited) |
Total Returns* As of April 30, 2016 | ||||||||||||||||||||
Class A with Load | Class A without Load | Retail Class | Institutional Class | Russell 2000® Value Index(a) | ||||||||||||||||
Six Months | -4.51 | % | 1.30 | % | 1.31 | % | 1.45 | % | 1.18 | % | ||||||||||
One Year | -8.23 | % | -2.62 | % | -2.64 | % | -2.36 | % | -3.71 | % | ||||||||||
Three Year | 7.09 | % | 9.22 | % | 9.19 | % | 9.43 | % | 6.50 | % | ||||||||||
Five Year | 5.55 | % | 6.81 | % | 6.78 | % | 7.01 | % | 6.77 | % | ||||||||||
Ten Year | N/A | N/A | 6.57 | % | N/A | 4.61 | % | |||||||||||||
Since Inception (11/20/09) | 9.47 | % | 10.48 | % | N/A | N/A | 11.35 | % | ||||||||||||
Since Inception (8/22/07) | N/A | N/A | N/A | 6.40 | % | 4.75 | % | |||||||||||||
Since Inception (12/31/03) | N/A | N/A | 9.78 | % | N/A | 6.79 | % | |||||||||||||
Expense Ratios(b) | ||||||||||||||||||||
Class A | Retail Class | Institutional Class | ||||||||||||||||||
1.45 | % | 1.45 | % | 1.20 | % |
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 Foundry Partners Fundamental Small Cap Value Fund (formerly the Dreman Contrarian Small Cap Value Fund) (the “Fund”) distributions or the redemption of Fund shares. THE FUND’S RETURNS REPRESENT PAST PERFORMANCE AND DO NOT PREDICT FUTURE RESULTS. The returns shown are net of all recurring expenses. Current performance of the Fund may be lower or higher than the performance quoted. For more information on the Fund, and to obtain performance data current to the most recent month end, or to request a prospectus or summary prospectus, please call 1-800-247-1014.
You should carefully consider the investment objectives, potential risk, management fees, and charges and expenses of the Fund before investing. The Fund’s prospectus and summary prospectus contains this and other information about the Fund, and should be read carefully before investing.
* | The total return figures set forth above include all waivers of fees for various periods since inception. Without such fee waivers, the total returns would have been lower. Total return figures reflect any change in price per share and assume reinvestment of all distributions. Total returns for Class A with Load include the maximum 5.75% sales charge. Total returns for periods less than 1 year are not annualized. |
(a) | The Russell 2000® Value Index (“Index”) is an unmanaged benchmark that assumes reinvestment of all distributions and excludes the effect of taxes and fees. The Index is a widely recognized unmanaged index of equity prices and is representative of a broader market and range of securities than are found in the Fund’s portfolio. Individuals cannot invest directly in the Index; however, an individual can invest in ETFs or other investment vehicles that attempt to track the performance of a benchmark index. |
(b) | The expense ratios are from the Fund’s prospectus dated February 29, 2016. Foundry Partners, LLC (the “Adviser”) has contractually agreed to waive its management fee and/or reimburse certain operating expenses through February 28, 2017, but only to the extent necessary so that the Fund’s net expenses, excluding brokerage fees and commissions, borrowing costs (such as interest expense and dividend expense on securities sold short), taxes, extraordinary expenses, 12b-1 fees (Class A and Retail Class), and indirect expenses (such as fees and expenses of acquired funds), do not exceed 1.25%. Information pertaining to the Fund’s expense ratios as of April 30, 2016 can be found in the financial highlights. |
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. |
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
Summary of Fund’s Expenses – (Unaudited) |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and short-term redemption fees and (2) ongoing costs, including management fees, distribution and service (12b-1) fees and other Fund expenses. These Examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from November 1, 2015 through April 30, 2016.
Actual Expenses
The first line of the table for each class provides information about actual account values and actual expenses. You may use the information on these lines, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.60), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table for each class 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 balances 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.
Expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as the fee imposed on short-term redemptions. Therefore, the second line of the table for each class 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 transaction costs were included, your costs would have been higher.
Beginning November 1, 2015 | Ending April 30, 2016 | Expenses Paid During Period (a) | Annualized Expense Ratio | |||||||||||||||||
Foundry Partners Fundamental Small Cap Value Fund |
| |||||||||||||||||||
Class A Shares | Actual | $ | 1,000.00 | $ | 1,013.00 | $ | 7.36 | 1.47 | % | |||||||||||
Hypothetical | (b) | $ | 1,000.00 | $ | 1,017.55 | $ | 7.37 | 1.47 | % | |||||||||||
Retail Shares | Actual | $ | 1,000.00 | $ | 1,013.10 | $ | 7.36 | 1.47 | % | |||||||||||
Hypothetical | (b) | $ | 1,000.00 | $ | 1,017.51 | $ | 7.37 | 1.47 | % | |||||||||||
Institutional Shares | Actual | $ | 1,000.00 | $ | 1,014.50 | $ | 6.12 | 1.22 | % | |||||||||||
Hypothetical | (b) | $ | 1,000.00 | $ | 1,018.79 | $ | 6.13 | 1.22 | % |
(a) | Expenses are equal to the Fund’s annualized expense ratios, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). The annualized expense ratios reflect reimbursement of expenses by the Fund’s investment adviser for the period beginning November 1, 2015 through April 30, 2016. The “Financial Highlights” tables in the Fund’s financial statements, included in this report, also show the gross expense ratios, without such reimbursements. |
(b) | Hypothetical assumes 5% annual return before expenses. |
Semi-Annual Report
3
Foundry Partners Fundamental Small Cap Value Fund | April 30, 2016 |
Portfolio of Investments (Unaudited) |
Shares | Fair Value | |||||||||
| Common Stocks — 96.1% | |||||||||
| Consumer Discretionary — 10.6% | |||||||||
22,715 | Aaron’s, Inc. | $ | 595,360 | |||||||
129,095 | American Axle & Manufacturing Holdings, Inc. * | 2,002,263 | ||||||||
22,879 | Big 5 Sporting Goods Corp. | 276,607 | ||||||||
19,875 | Big Lots, Inc. | 911,467 | ||||||||
24,060 | Bloomin’ Brands, Inc. | 449,922 | ||||||||
27,485 | Brinker International, Inc. | 1,273,105 | ||||||||
38,016 | Cooper Tire & Rubber Co. | 1,313,073 | ||||||||
25,401 | DeVry Education Group, Inc. | 440,707 | ||||||||
24,410 | Finish Line, Inc./The, Class A | 482,098 | ||||||||
8,043 | Helen of Troy Ltd. * | 800,520 | ||||||||
16,229 | John Wiley & Sons, Inc., Class A | 804,796 | ||||||||
87,470 | KB Home | 1,186,968 | ||||||||
17,255 | Matthews International Corp., Class A | 908,303 | ||||||||
36,801 | Meredith Corp. | 1,888,259 | ||||||||
18,320 | Movado Group, Inc. | 516,807 | ||||||||
29,795 | Rent-A-Center, Inc. | 437,987 | ||||||||
14,288,242 | ||||||||||
| Consumer Staples — 0.5% | |||||||||
23,150 | SpartanNash Co. | 641,255 | ||||||||
| Energy — 1.2% | |||||||||
47,050 | Atwood Oceanics, Inc. | 454,503 | ||||||||
129,650 | Denbury Resources, Inc. | 500,449 | ||||||||
211,250 | Gran Tierra Energy, Inc. * | 625,300 | ||||||||
1,580,252 | ||||||||||
| Financials — 24.0% | |||||||||
32,768 | Allied World Assurance Co. Holdings AG | 1,165,885 | ||||||||
36,196 | Aspen Insurance Holdings Ltd. | 1,677,685 | ||||||||
108,610 | Associated Banc-Corp. | 1,981,046 | ||||||||
18,209 | Chemical Financial Corp. | 700,318 | ||||||||
20,982 | Clifton Bancorp, Inc. | 312,212 | ||||||||
30,338 | Endurance Specialty Holdings Ltd. | 1,941,025 | ||||||||
65,640 | First Midwest Bancorp, Inc. | 1,213,027 | ||||||||
204,619 | First Niagara Financial Group, Inc. | 2,160,777 | ||||||||
88,914 | FirstMerit Corp. | 1,970,334 | ||||||||
160,090 | Fulton Financial Corp. | 2,239,659 | ||||||||
72,825 | Hancock Holding Co. | 1,891,265 | ||||||||
18,470 | Hanover Insurance Group, Inc. | 1,583,987 | ||||||||
46,854 | International Bancshares Corp. | 1,227,106 |
Shares | Fair Value | |||||||||
| Common Stocks — (continued) | |||||||||
| Financials — (continued) | |||||||||
71,349 | Janus Capital Group, Inc. | $ | 1,041,695 | |||||||
16,823 | Nelnet, Inc., Class A | 705,052 | ||||||||
146,940 | Old National Bancorp | 1,968,996 | ||||||||
22,828 | Prosperity Bancshares, Inc. | 1,204,634 | ||||||||
106,067 | TCF Financial Corp. | 1,446,754 | ||||||||
44,620 | Umpqua Holdings Corp. | 706,335 | ||||||||
25,320 | Waddell & Reed Financial, Inc., Class A | 515,009 | ||||||||
89,810 | Washington Federal, Inc. | 2,181,485 | ||||||||
13,390 | WesBanco, Inc. | 430,221 | ||||||||
42,056 | Wintrust Financial Corp. | 2,187,753 | ||||||||
32,452,260 | ||||||||||
| Health Care — 4.9% | |||||||||
11,052 | Charles River Laboratories International, Inc. * | 876,092 | ||||||||
30,229 | Hill-Rom Holdings, Inc. | 1,461,572 | ||||||||
3,245 | Integra LifeSciences Holdings Corp. * | 229,811 | ||||||||
37,827 | Owens & Minor, Inc. | 1,376,525 | ||||||||
158,140 | Select Medical Holdings Corp. * | 2,115,913 | ||||||||
20,507 | Triple-S Management Corp., Class B * | 534,002 | ||||||||
6,593,915 | ||||||||||
| Industrials — 17.2% | |||||||||
62,336 | AAR Corp. | 1,498,557 | ||||||||
11,965 | ABM Industries, Inc. | 384,914 | ||||||||
42,172 | Aegion Corp. * | 895,312 | ||||||||
92,954 | Aircastle Ltd. | 2,017,102 | ||||||||
58,397 | Barnes Group, Inc. | 1,897,319 | ||||||||
38,205 | Brink’s Co./The | 1,292,857 | ||||||||
33,062 | Crane Co. | 1,837,255 | ||||||||
28,960 | EMCOR Group, Inc. | 1,403,981 | ||||||||
24,085 | EnerSys | 1,405,841 | ||||||||
37,986 | Global Brass & Copper Holdings, Inc. | 1,029,421 | ||||||||
33,667 | Hillenbrand, Inc. | 1,020,447 | ||||||||
14,615 | Hyster-Yale Materials Handling, Inc., Class A | 895,169 | ||||||||
27,120 | Navigant Consulting, Inc. * | 432,835 | ||||||||
109,954 | R.R. Donnelley & Sons Co. | 1,913,200 | ||||||||
25,740 | Regal-Beloit Corp. | 1,658,171 | ||||||||
31,410 | Triumph Group, Inc. | 1,136,414 | ||||||||
87,095 | Tutor Perini Corp. * | 1,377,843 | ||||||||
15,010 | Universal Forest Products, Inc. | 1,150,516 | ||||||||
23,247,154 |
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
4
Foundry Partners Fundamental Small Cap Value Fund | April 30, 2016 |
Portfolio of Investments (Unaudited) (Continued) |
Shares | Fair Value | |||||||||
| Common Stocks — (continued) | |||||||||
| Information Technology — 17.0% | |||||||||
38,540 | AVX Corp. | $ | 509,499 | |||||||
48,385 | Brocade Communications Systems, Inc. | 464,980 | ||||||||
82,986 | Celestica, Inc. * | 890,440 | ||||||||
21,419 | ChipMOS Technologies (Bermuda) Ltd. | 360,268 | ||||||||
25,210 | CSG Systems International, Inc. | 1,118,820 | ||||||||
28,070 | Diodes Inc. * | 522,663 | ||||||||
6,180 | DST Systems, Inc. | 745,802 | ||||||||
57,200 | Ingram Micro, Inc., Class A | 1,999,140 | ||||||||
30,532 | Itron, Inc. * | 1,255,476 | ||||||||
37,933 | IXYS Corp. | 409,676 | ||||||||
43,265 | Kulicke & Soffa Industries, Inc. * | 463,801 | ||||||||
43,880 | Lexmark International, Inc., Class A | 1,693,768 | ||||||||
71,690 | Mentor Graphics Corp. | 1,430,932 | ||||||||
45,375 | Microsemi Corp. * | 1,533,221 | ||||||||
15,970 | NETGEAR, Inc. * | 677,128 | ||||||||
33,200 | Plantronics, Inc. | 1,276,540 | ||||||||
102,997 | QLogic Corp. * | 1,348,231 | ||||||||
66,202 | Sanmina Corp. * | 1,565,677 | ||||||||
20,900 | Science Applications International Corp. | 1,109,581 | ||||||||
15,973 | Sykes Enterprises, Inc. * | 465,613 | ||||||||
18,463 | Tech Data Corp. * | 1,268,223 | ||||||||
149,655 | Vishay Intertechnology, Inc. | 1,819,805 | ||||||||
22,929,284 | ||||||||||
| Materials — 5.1% | |||||||||
22,365 | A Schulman, Inc. | 623,760 | ||||||||
27,794 | Cabot Corp. | 1,356,069 | ||||||||
116,426 | Coeur Mining, Inc. * | 943,051 | ||||||||
47,715 | Olin Corp. | 1,039,710 | ||||||||
40,440 | Owens-Illinois, Inc. * | 746,522 | ||||||||
61,362 | Pan American Silver Corp. | 961,543 | ||||||||
19,870 | Stepan Co. | 1,217,832 | ||||||||
6,888,487 | ||||||||||
| Real Estate Investment Trusts — 11.3% | |||||||||
67,085 | Apollo Residential Mortgage, Inc. | 909,673 | ||||||||
42,782 | Ashford Hospitality Prime, Inc. | 478,731 | ||||||||
134,661 | Ashford Hospitality Trust, Inc. | 752,755 | ||||||||
151,760 | Brandywine Realty Trust | 2,268,812 | ||||||||
94,774 | CBL & Associates Properties, Inc. | 1,106,960 | ||||||||
49,324 | GEO Group Inc./The | 1,579,848 |
Shares | Fair Value | |||||||||
| Common Stocks — (continued) | |||||||||
| Real Estate Investment Trusts — | |||||||||
35,254 | Hospitality Properties Trust | $ | 902,150 | |||||||
69,768 | Mack-Cali Realty Corp. | 1,783,270 | ||||||||
144,858 | Medical Properties Trust, Inc. | 1,928,060 | ||||||||
77,687 | New Residential Investment Corp. | 940,013 | ||||||||
79,147 | Pennsylvania Real Estate Investment Trust | 1,815,632 | ||||||||
253,110 | RAIT Financial Trust | 769,454 | ||||||||
15,235,358 | ||||||||||
| Utilities — 4.3% | |||||||||
37,846 | ALLETE, Inc. | 2,126,567 | ||||||||
26,238 | IDACORP, Inc. | 1,908,290 | ||||||||
44,178 | Portland General Electric Co. | 1,754,750 | ||||||||
5,789,607 | ||||||||||
| Total Common Stocks | 129,645,814 | ||||||||
| Money Market — 3.8% | |||||||||
5,091,906 | Fidelity Institutional Money Market Portfolio, Institutional Class, 0.37% (a) | 5,091,906 | ||||||||
| Total Money Market | 5,091,906 | ||||||||
| Total Investments | 134,737,720 | ||||||||
| Other Assets in Excess of | 188,331 | ||||||||
| Net Assets — 100.0% | $ | 134,926,051 |
(a) | Rate disclosed is the seven day yield as of April 30, 2016. |
* | Non-income producing security. |
The sectors shown on the portfolio of investments are based on the 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 Ultimus Asset Services, LLC.
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
5
Statement of Assets and Liabilities
April 30, 2016 (Unaudited)
Assets: | ||||
Investments in securities, at cost | $ | 132,001,624 | ||
Investments in securities, at fair value | 134,737,720 | |||
Dividends receivable | 89,983 | |||
Receivable for investments sold | 380,827 | |||
Receivable for fund shares sold | 50,671 | |||
Prepaid expenses | 50,186 | |||
Total assets | 135,309,387 | |||
Liabilities: | ||||
Payable for shares redeemed | 228,553 | |||
Payable to Adviser | 93,645 | |||
Payable to administrator | 19,026 | |||
Payable to custodian | 16,287 | |||
Accrued 12b-1 fees | 8,951 | |||
Payable to trustees | 287 | |||
Other accrued expenses | 16,587 | |||
Total liabilities | 383,336 | |||
Net Assets | $ | 134,926,051 | ||
Net Assets consist of: | ||||
Paid in capital | $ | 130,946,267 | ||
Accumulated undistributed net investment income | 9,314 | |||
Accumulated undistributed net realized gain on investments | 1,234,374 | |||
Net unrealized appreciation on investments | 2,736,096 | |||
Net Assets | $ | 134,926,051 | ||
Net Assets (unlimited number of shares authorized) | ||||
Class A: | ||||
Net assets | $ | 3,064,039 | ||
Shares outstanding | 160,190 | |||
Net asset value and redemption price per share | $ | 19.13 | ||
Offering price per share (NAV/0.9425) (a) | $ | 20.30 | ||
Retail Class: | ||||
Net assets | $ | 39,867,024 | ||
Shares outstanding | 2,078,722 | |||
Net asset value and offering price per share | $ | 19.18 | ||
Redemption price per share (NAV * 0.99) (b) | $ | 18.99 | ||
Institutional Class: | ||||
Net assets | $ | 91,994,988 | ||
Shares outstanding | 4,776,527 | |||
Net asset value, offering and redemption price per share | $ | 19.26 | ||
(a) | Class A shares impose a maximum 5.75% sales charge on purchases. |
(b) | A redemption fee of 1.00% is charged on shares held less than 60 days. |
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
6
Statement of Operations
For the Period Ended April 30, 2016 (Unaudited)
Investment Income: | ||||
Dividend income | $ | 1,737,105 | ||
Dividend income from affiliated securities | 145 | |||
Foreign dividend taxes withheld | (566 | ) | ||
Total investment income | 1,736,684 | |||
Expenses: | ||||
Investment Adviser | 558,826 | |||
Distribution/12b-1: | ||||
Class A | 3,758 | |||
Retail Class | 59,289 | |||
Administration | 124,513 | |||
Legal | 13,249 | |||
Registration | 31,505 | |||
Printing | 12,526 | |||
Audit | 8,262 | |||
Custodian | 27,633 | |||
Trustee | 3,899 | |||
Miscellaneous | 22,381 | |||
Net operating expenses | 865,841 | |||
Net investment income | 870,843 | |||
Realized & Unrealized Gain on Investments | ||||
Net realized gain on investment securities | 1,464,020 | |||
Change in unrealized appreciation on investment securities | (1,241,717 | ) | ||
Net realized and unrealized gain on investment securities | 222,303 | |||
Net increase in net assets resulting from operations | $ | 1,093,146 | ||
See accompanying notes which are an integral part of these financial statements.
Semi-Annual Report
7
Statements of Changes in Net Assets
Period Ended April 30, 2016 | Year Ended October 31, 2015 | |||||||
(Unaudited | ) | |||||||
Increase (Decrease) in Net Assets due to: | ||||||||
Operations: | ||||||||
Net investment income | $ | 870,843 | $ | 1,528,058 | ||||
Net realized gain on investment securities | 1,464,020 | 14,531,505 | ||||||
Change in unrealized appreciation on investment securities | (1,241,717 | ) | (15,576,288 | ) | ||||
Net increase in net assets resulting from operations | 1,093,146 | 483,275 | ||||||
Distributions From: Net investment income: | ||||||||
Class A | (48,014 | ) | (24,971 | ) | ||||
Retail Class | (718,238 | ) | (498,693 | ) | ||||
Institutional Class | (1,145,978 | ) | (815,183 | ) | ||||
Realized gain: | ||||||||
Class A | (384,616 | ) | (310,960 | ) | ||||
Retail Class | (5,875,018 | ) | (5,763,778 | ) | ||||
Institutional Class | (7,745,108 | ) | (7,217,978 | ) | ||||
Total distributions | (15,916,972 | ) | (14,631,563 | ) | ||||
Capital Transactions—Class A: | ||||||||
Proceeds from shares sold | 1,077,981 | 1,016,533 | ||||||
Reinvestment of distributions | 423,710 | 331,469 | ||||||
Amount paid for shares redeemed | (1,484,251 | ) | (545,748 | ) | ||||
Total Class A | 17,440 | 802,254 | ||||||
Capital Transactions—Retail Class: | ||||||||
Proceeds from shares sold | 3,301,646 | 12,838,383 | ||||||
Reinvestment of distributions | 6,521,846 | 6,187,695 | ||||||
Amount paid for shares redeemed | (22,221,210 | ) | (16,810,930 | ) | ||||
Proceeds from redemption fees (a) | 982 | 500 | ||||||
Total Retail Class | (12,396,736 | ) | 2,215,648 | |||||
Capital Transactions—Institutional Class: | ||||||||
Proceeds from shares sold | 19,323,877 | 17,300,097 | ||||||
Reinvestment of distributions | 8,579,713 | 7,245,776 | ||||||
Amount paid for shares redeemed | (16,484,467 | ) | (11,889,014 | ) | ||||
Total Institutional Class | 11,419,123 | 12,656,859 | ||||||
Net change resulting from capital transactions | (960,173 | ) | 15,674,761 | |||||
Total Increase (Decrease) in Net Assets | (15,783,999 | ) | 1,526,473 | |||||
Net Assets: | ||||||||
Beginning of period | 150,710,050 | 149,183,577 | ||||||
End of period | $ | 134,926,051 | $ | 150,710,050 | ||||
Accumulated net investment income included in net assets at end of period | $ | 9,314 | $ | 1,050,701 |
See accompanying notes which are an integral part of these financial statements.
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Period Ended April 30, 2016 | Year Ended October 31, 2015 | |||||||
(Unaudited | ) | |||||||
Share Transactions—Class A: | ||||||||
Shares sold | $ | 59,048 | $ | 45,674 | ||||
Shares issued in reinvestment of distributions | 23,141 | 15,275 | ||||||
Shares redeemed | (88,251 | ) | (25,241 | ) | ||||
Total Class A | (6,062 | ) | 35,708 | |||||
Share Transactions—Retail Class: | ||||||||
Shares sold | 181,541 | 590,308 | ||||||
Shares issued in reinvestment of distributions | 355,220 | 284,492 | ||||||
Shares redeemed | (1,266,636 | ) | (775,888 | ) | ||||
Total Retail Class | (729,875 | ) | 98,912 | |||||
Share Transactions—Institutional Class: | ||||||||
Shares sold | 1,092,772 | 784,994 | ||||||
Shares issued in reinvestment of distributions | 465,782 | 332,223 | ||||||
Shares redeemed | (825,709 | ) | (531,356 | ) | ||||
Total Institutional Class | 732,845 | 585,861 |
(a) | A redemption fee of 1.00% is charged on shares held less than 60 days. |
See accompanying notes which are an integral part of these financial statements.
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Financial Highlights |
(For a share outstanding throughout each period ended October 31 or April 30 as noted)
Net Asset Value, beginning of period | Net investment income (loss) | Net realized and unrealized gain (loss) on investments | Total from investment operations | Distributions from net investment income | Distributions | Total distributions | ||||||||||||||||||||||
FOUNDRY PARTNERS FUNDAMENTAL SMALL CAP VALUE FUND | ||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||
2011 | $ | 18.30 | 0.10 | (0.22 | ) | (0.12 | ) | (0.13 | ) | — | (0.13 | ) | ||||||||||||||||
2012 | $ | 18.07 | 0.11 | 1.47 | 1.58 | (0.19 | ) | (1.66 | ) | (1.85 | ) | |||||||||||||||||
2013 | $ | 17.80 | 0.12 | 6.14 | 6.26 | (0.08 | ) | (0.16 | ) | (0.24 | ) | |||||||||||||||||
2014 | $ | 23.82 | 0.15 | (d) | 2.12 | 2.27 | (0.16 | ) | (2.36 | ) | (2.52 | ) | ||||||||||||||||
2015 | $ | 23.57 | 0.19 | (0.10 | ) | 0.09 | (0.17 | ) | (2.12 | ) | (2.29 | ) | ||||||||||||||||
2016 (e) | $ | 21.37 | 0.11 | (d) | 0.06 | 0.17 | (0.27 | ) | (2.14 | ) | (2.41 | ) | ||||||||||||||||
Retail Class | ||||||||||||||||||||||||||||
2011 | $ | 18.35 | 0.11 | (0.22 | ) | (0.11 | ) | (0.13 | ) | — | (0.13 | ) | ||||||||||||||||
2012 | $ | 18.11 | 0.11 | 1.47 | 1.58 | (0.17 | ) | (1.66 | ) | (1.83 | ) | |||||||||||||||||
2013 | $ | 17.86 | 0.17 | 6.08 | 6.25 | (0.08 | ) | (0.16 | ) | (0.24 | ) | |||||||||||||||||
2014 | $ | 23.87 | 0.15 | 2.13 | 2.28 | (0.16 | ) | (2.36 | ) | (2.52 | ) | |||||||||||||||||
2015 | $ | 23.63 | 0.19 | (0.11 | ) | 0.08 | (0.18 | ) | (2.12 | ) | (2.30 | ) | ||||||||||||||||
2016 (e) | $ | 21.41 | 0.11 | (d) | 0.06 | 0.17 | (0.26 | ) | (2.14 | ) | (2.40 | ) | ||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||
2011 | $ | 18.40 | 0.31 | (0.38 | ) | (0.07 | ) | (0.14 | ) | — | (0.14 | ) | ||||||||||||||||
2012 | $ | 18.19 | 0.14 | 1.48 | 1.62 | (0.23 | ) | (1.66 | ) | (1.89 | ) | |||||||||||||||||
2013 | $ | 17.92 | 0.20 | 6.10 | 6.30 | (0.08 | ) | (0.16 | ) | (0.24 | ) | |||||||||||||||||
2014 | $ | 23.98 | 0.20 | (d) | 2.14 | 2.34 | (0.22 | ) | (2.36 | ) | (2.58 | ) | ||||||||||||||||
2015 | $ | 23.74 | 0.26 | (0.12 | ) | 0.14 | (0.24 | ) | (2.12 | ) | (2.36 | ) | ||||||||||||||||
2016 (e) | $ | 21.52 | 0.13 | (d) | 0.07 | 0.20 | (0.32 | ) | (2.14 | ) | (2.46 | ) |
(a) | Total return represents the rate the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends, and excludes any sales charges and redemption fees. |
(b) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
(c) | The expense ratios shown include overdraft fees charged to the Fund. Without these overdraft fees, the expense ratios would be 1.25% for Class A and Retail Class and 1.00% for Institutional Class. |
(d) | Per share amount has been calculated using the average shares method. |
(e) | Period ended April 30, 2016 (Unaudited). |
(f) | Not annualized |
(g) | Annualized |
(h) | Amount is less than $0.005. |
See accompanying notes which are an integral part of these financial statements.
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Paid in capital from redemption fees | Net Asset Value, end | Total return(a) | Net Assets, end of period (000 omitted) | Ratio of net expenses to average net assets | Ratio of expenses net assets | Ratio of net investment income (loss) to average net assets | Ratio of net investment income (loss) to average net assets before waiver & reimbursement by Adviser | Portfolio turnover rate (b) | ||||||||||||||||||||||||||
0.02 | $ | 18.07 | (0.60 | )% | $ | 1,935 | 1.25 | % | 1.49 | % | 0.46 | % | 0.22 | % | 44.08 | % | ||||||||||||||||||
— | $ | 17.80 | 9.92 | % | $ | 3,180 | 1.25 | % | 1.75 | % | 0.55 | % | 0.05 | % | 30.19 | % | ||||||||||||||||||
— | $ | 23.82 | 35.56 | % | $ | 5,106 | 1.26 | %(c) | 1.51 | % | 0.65 | % | 0.40 | % | 28.28 | % | ||||||||||||||||||
— | $ | 23.57 | 9.89 | % | $ | 3,077 | 1.25 | % | 1.37 | % | 0.63 | % | 0.51 | % | 36.66 | % | ||||||||||||||||||
— | $ | 21.37 | 0.24 | % | $ | 3,552 | 1.37 | % | 1.41 | % | 0.87 | % | 0.83 | % | 43.59 | % | ||||||||||||||||||
— | $ | 19.13 | 1.30 | %(f) | $ | 3,064 | 1.47 | %(g) | 1.47 | %(g) | 1.22 | %(g) | 1.22 | %(g) | 7.73 | %(f) | ||||||||||||||||||
— | (h) | $ | 18.11 | (0.66 | )% | $ | 82,840 | 1.25 | % | 1.51 | % | 0.57 | % | 0.32 | % | 44.08 | % | |||||||||||||||||
— | (h) | $ | 17.86 | 9.93 | % | $ | 69,992 | 1.25 | % | 1.74 | % | 0.56 | % | 0.06 | % | 30.19 | % | |||||||||||||||||
— | (h) | $ | 23.87 | 35.38 | % | $ | 63,976 | 1.26 | %(c) | 1.53 | % | 0.72 | % | 0.45 | % | 28.28 | % | |||||||||||||||||
— | (h) | $ | 23.63 | 9.89 | % | $ | 64,020 | 1.25 | % | 1.37 | % | 0.63 | % | 0.51 | % | 36.66 | % | |||||||||||||||||
— | (h) | $ | 21.41 | 0.21 | % | $ | 60,134 | 1.37 | % | 1.41 | % | 0.87 | % | 0.83 | % | 43.59 | % | |||||||||||||||||
— | (h) | $ | 19.18 | 1.31 | %(f) | $ | 39,867 | 1.47 | %(g) | 1.47 | %(g) | 1.18 | %(g) | 1.18 | %(g) | 7.73 | %(f) | |||||||||||||||||
— | $ | 18.19 | (0.44 | )% | $ | 11,472 | 1.00 | % | 1.26 | % | 0.85 | % | 0.59 | % | 44.08 | % | ||||||||||||||||||
— | $ | 17.92 | 10.14 | % | $ | 13,185 | 1.00 | % | 1.49 | % | 0.80 | % | 0.30 | % | 30.19 | % | ||||||||||||||||||
— | $ | 23.98 | 35.55 | % | $ | 14,689 | 1.01 | %(c) | 1.27 | % | 0.95 | % | 0.68 | % | 28.28 | % | ||||||||||||||||||
— | $ | 23.74 | 10.12 | % | $ | 82,086 | 1.00 | % | 1.12 | % | 0.85 | % | 0.73 | % | 36.66 | % | ||||||||||||||||||
— | $ | 21.52 | 0.46 | % | $ | 87,023 | 1.12 | % | 1.16 | % | 1.12 | % | 1.08 | % | 43.59 | % | ||||||||||||||||||
— | $ | 19.26 | 1.45 | %(f) | $ | 91,995 | 1.22 | %(g) | 1.22 | %(g) | 1.41 | %(g) | 1.41 | %(g) | 7.73 | %(f) |
See accompanying notes which are an integral part of these financial statements.
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Notes to the Financial Statements |
April 30, 2016 (Unaudited)
Note 1. Organization
The Foundry Partners Fundamental Small Cap Value Fund (the “Fund”) (formerly the Dreman Contrarian Small Cap Value 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 Board of Trustees (the “Board”) 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. The Fund’s investment adviser through the six months ended April 30, 2016 was Dreman Value Management, LLC (the “Adviser”). The investment objective of the Fund is long-term capital appreciation.
The Fund currently offers Class A shares, Retail Class shares, and Institutional Class shares. Class A shares are offered with a front-end sales charge. The Retail Class shares impose a 1% redemption fee on all shares redeemed within 60 days of purchase. Institutional Class shares do not have sales charges on original purchases.
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”).
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.
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.
During the period ended April 30, 2016, the Fund did not have a liability for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax
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benefits as income tax expense in the statement of operations. During the period, the Fund did not incur any interest or penalties.
Expenses—Expenses incurred by the Trust that do not relate to a specific fund of the Trust are allocated to the individual funds based on each fund’s relative net assets or other appropriate basis (as determined by the Board). Expenses attributable to any class are borne by that class. Income, realized gains and losses, unrealized appreciation and depreciation, and expenses are allocated to each class based on the net assets in relation to the relative net assets of the Fund.
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.
Dividends and Distributions—Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The Fund intends to distribute substantially all of its net investment income on, at least, an annual basis. The Fund also intends to distribute its net realized long-term capital gains and its net realized short-term capital gains, if any, at least once a year. 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 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 a timely 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 particular valuation technique used to measure fair value including such 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.
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Notes to the Financial Statements (Continued) |
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 which is reported, 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 traded in the NASDAQ over-the-counter market are generally valued by a pricing service at the NASDAQ Official Closing Price.
When using the market quotations or close prices provided by a 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 by the Adviser, in conformity with policies adopted by and subject to review by the Board. These securities will generally 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 pricing agent of the Fund. These securities are categorized as Level 1 securities.
In accordance with the Trust’s valuation policies, 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
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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 that the owner might reasonably expect to receive for them upon their current sale. Methods that are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market prices 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. Fair-value 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.
The following is a summary of the inputs used to value the Fund’s investments as of April 30, 2016:
Valuation Inputs | ||||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 129,645,814 | $ | — | $ | — | $ | 129,645,814 | ||||||||
Money Market Securities | 5,091,906 | — | — | 5,091,906 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 134,737,720 | $ | — | $ | — | $ | 134,737,720 |
* | Refer to Schedule of Investments for industry classifications. |
The Fund did not hold any investments at any time during the reporting period for which other significant observable inputs (Level 2) were used in determining fair value. The Fund did not hold any investments at any time during the reporting period for 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 period ended April 30, 2016.
Note 4. Fees And Other Transactions With Affiliates And Other Service Providers
Under the terms of the management agreement between the Trust and the Adviser (the “Agreement”) for the Fund, 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 0.85% of the average daily net assets of the Fund. For the period ended April 30, 2016, the Adviser earned fees of $558,826 from the Fund. At April 30, 2016, the Fund owed $93,645 to the Adviser.
The Adviser had contractually agreed to waive its management fee and reimburse certain 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 expense and dividends on securities sold short), taxes distribution and service (12b-1) fees, extraordinary expenses, and
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15
Notes to the Financial Statements (Continued) |
any indirect expenses (such as fees and expenses of acquired funds), do not exceed 1.25% of the net assets of the Fund.
Each fee waiver or reimbursement by the Adviser is subject to recoupment by the Fund within the three fiscal years following the fiscal year in which the waiver or expense incurred, provided that the Fund is able to make the recoupment without exceeding the expense limitation that is in effect at the time of the recoupment or at the time of the waiver or reimbursement. The contractual agreement is in effect through February 28, 2017. The expense cap may not be terminated prior to this date except by the Board. For the period ended April 30, 2016, the Adviser did not waive any fees from the Fund.
The amounts that were subject to recoupment by the Fund, as of April 30, 2016, pursuant to the aforementioned conditions are as follows:
Amount | Recoverable through October 31, | |||||
$215,534 | 2016 | |||||
$166,367 | 2017 | |||||
$67,514 | 2018 |
The Trust retains Ultimus Asset Services, LLC (“Ultimus”), formerly Huntington Asset Services, Inc. (“HASI”), to provide the Fund with administrative, accounting, transfer agent, and compliance services, including all regulatory reporting. For the period ended April 30, 2016, Ultimus earned fees of $124,513 for administrative services. At April 30, 2016, Ultimus was owed $19,026 for administrative services.
Certain officers and one Trustee of the Trust are members of management and employees of Ultimus.
Unified Financial Securities, LLC (the “Distributor” or “Unified”) acts as the principal distributor of the Fund’s shares. Huntington National Bank is the custodian of the Fund’s investments (the “Custodian”). Effective at the close of business on December 31, 2015, Ultimus acquired HASI and the Distributor from Huntington Bancshares, Inc. (“HBI”). Prior to January 1, 2016, the Custodian, HASI and the Distributor were under common control by HBI. For the period ended April 30, 2016, the Custodian earned fees of $27,633 for custody services. At April 30, 2016, the Custodian was owed $16,287 for custody services fees.
The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Investment Company Act of 1940 as amended (the “1940 Act”). The Plan provides that the Fund will pay the Distributor or any registered securities dealer, financial institution or any other person (a “Recipient”) a fee aggregating up to 0.25% of the average daily net assets for each of the Class A shares and Retail Class shares 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
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and mailing of sales literature; and servicing shareholder accounts. The Fund or the Adviser may pay all or a portion of these fees to any Recipient who renders assistance in distributing or promoting the sale of shares, or who provides certain shareholder services, pursuant to a written agreement. The Plan is a compensation plan, which means that compensation is paid regardless of 12b-1 expenses actually incurred. It is anticipated that the Plan will benefit shareholders because an effective sales program typically is necessary in order for the Fund to reach and maintain a sufficient size to achieve efficiently its investment objectives and to realize economies of scale. For the period ended April 30, 2016, Class A shares 12b-1 expense incurred by the Fund was $3,758 and Retail Class shares 12b-1 expense incurred by the Fund was $59,289. The Fund owed $606 for Class A shares and $8,345 for Retail Class shares 12b-1 fees as of April 30, 2016.
During the period ended April 30, 2016, the Distributor received $2,868 from commissions earned on sales of Class A shares, of which $2,750 was re-allowed to intermediaries of the Fund. An officer of the Trust is an officer of the Distributor and such person may be deemed to be an affiliate of the Distributor.
The Fund may invest in certain affiliated money market funds which were managed by an affiliated party of the Distributor. Income distributions earned from investments in this Fund are recorded as dividend income from affiliates in the accompanying financial statements. A summary of the Fund’s investment in such affiliated money market funds is presented in the table below:
Affiliated Fund | 10/31/15 Fair Value | Purchases | Sales | 4/30/16 Fair Value | Income | |||||||||||||||
Huntington Money Market Fund, Institutional Shares | $ | 9,266,949 | $ | 365,372 | $ | (9,632,321 | ) | $ | — | $ | 145 |
Note 5. Purchases And Sales Of Securities
For the period ended April 30, 2016, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations were as follows:
Amount | ||||
Purchases | ||||
U.S. Government Obligations | $ | — | ||
Other | 10,020,921 | |||
Sales | ||||
U.S. Government Obligations | $ | — | ||
Other | 22,139,574 |
Note 6. Beneficial Ownership
The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under Section 2(a) (9) of the 1940 Act. At April 30, 2016, Charles Schwab & Co. (“Schwab”) owned, as record shareholder, 48% of the
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17
Notes to the Financial Statements (Continued) |
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 7. Federal Income Taxes
At April 30, 2016, the net unrealized appreciation (depreciation) of investments for tax purposes was as follows:
Gross Unrealized Appreciation | $ | 13,051,893 | ||
Gross Unrealized (Depreciation) | (11,007,190 | ) | ||
Net Unrealized Appreciation on Investments* | $ | 2,044,703 |
At April 30, 2016, the difference between book basis and tax basis unrealized appreciation (depreciation) is attributable to the tax deferral of losses on wash sales and mark-to-market adjustments on passive foreign investment companies.
At April 30, 2016, the aggregate cost of securities for federal income tax purposes was $132,693,017 for the Fund.
At October 31, 2015, the Fund’s most recent fiscal year end, the components of distributable earnings (accumulated losses) on a tax basis were as follows:
Fund | Undistributed Ordinary Income | Undistributed Long-Term Capital Gains | Unrealized Appreciation/ (Depreciation)* | Total Accumulated Earnings/ (Deficit) | ||||||||||||
Foundry Partners Fundamental Small Cap Value Fund | $ | 1,515,104 | $ | 14,002,086 | $ | 3,286,420 | $ | 18,803,610 |
* | The difference between book basis and tax basis unrealized appreciation (depreciation) is attributable to the tax deferral of losses on wash sales and mark-to-market adjustments on passive foreign investment companies. |
The tax character of distributions paid for the fiscal period ended October 31, 2015 was as follows:
Distributions Paid From* | ||||||||||||||||||||
Fund | Ordinary Income | Net Long-Term | Total Taxable Distributions | Tax Return of Capital | Total Distributions Paid | |||||||||||||||
Foundry Partners Fundamental Small Cap Value Fund | $ | 4,167,704 | $ | 10,463,859 | $ | 14,631,563 | $ | — | $ | 14,631,563 |
* | The tax character of distributions paid may differ from the character of distributions shown on the statements of changes in net assets due to short-term capital gains being treated as ordinary income for tax purposes. |
Note 8. 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
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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 9. Subsequent Events
Management of the Fund has evaluated the need for disclosure and/or adjustments resulting from subsequent events through the date these financial statements were issued. On June 20, 2016, Dreman Value Management, LLC (“Dreman”) assigned the management agreement with the Fund to Foundry Partners, LLC (“Foundry”). As part of this transaction, Mark Roach and Mario Tufano, two of the three portfolio managers to the Fund, agreed to transition to Foundry and will continue to manage the portfolio of the Fund. There will be no changes in the investment strategy of the Fund as a result of the assignment. Beginning June 21, 2016, The Board approved an interim advisory agreement with Foundry that will terminate upon the earlier of (i) 150 days from the date of the closing or (ii) the date of approval of a new investment advisory agreement by the shareholders of the Fund. Pursuant to this interim agreement, there will be no change in management fees paid by the Fund to Foundry, and all management fees under the interim agreement will be held in escrow pending the conclusion of the shareholder meeting. With the approval of an interim advisory agreement, the previous management agreement with Dreman was terminated along with all amounts that were previously subject to recoupment. Except for the effective and termination dates, the deposit of advisory fees into an escrow account, and other terms required by the 1940 Act, the terms of the interim agreement and the new agreement are identical to the terms of the current Investment Advisory Agreement. The new advisory agreement will be submitted to the shareholders of the Fund for their approval via a proxy solicitation. The mailing of the proxy statement and related solicitation were mailed out shortly thereafter. There are no additional items requiring adjustment of financial statements or additional disclosure.
Semi-Annual Report
19
Investment Advisory Agreement Approval (Unaudited)
At a meeting held on December 8-9, 2015, the Board of Trustees (the “Board”) considered the renewal of the Investment Advisory Agreement (the “Agreement”) between the Valued Advisers Trust (the “Trust”) and Dreman Value Management, LLC (the “Adviser” or “Dreman”) with respect to the Dreman Contrarian Small Cap Value Fund (the “Fund”). Dreman provided written information to the Board to assist the Board in its considerations.
The Board discussed the contractual arrangements between Dreman and the Trust with respect to the Fund. Trust counsel reminded the Trustees of their fiduciary duties and responsibilities as summarized in a memorandum from his firm, including the factors to be considered, and the application of those factors to Dreman. In assessing these factors and reaching its decisions, 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 prepared and/or presented in connection with the annual renewal process, including information presented at the meeting. The Board requested and 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 Dreman; (ii) quarterly assessments of the investment performance of the Fund by personnel of Dreman; (iii) commentary on the reasons for the performance; (iv) presentations by Dreman addressing Dreman’s investment philosophy, investment strategy, personnel and operations; (v) compliance and audit reports concerning the Fund and Dreman; (vi) disclosure information contained in the registration statement of the Trust and the Form ADV of Dreman; 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 to be considered and the types of information included in each factor that should be considered by the Board in order to make an informed decision. The Board also requested and received various informational materials including, without limitation: (i) documents containing information about Dreman, including financial information, a description of personnel and the 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 the Fund; and (iii) benefits to be realized by Dreman from its relationship with the Fund. The Board did not identify any particular information that was most relevant to its consideration to approve the Agreement and each trustee may have afforded different weight to the various factors.
1. | The nature, extent, and quality of the services to be provided by the Adviser. In this regard, the Board considered Dreman’s responsibilities under the Agreement. The trustees considered the services provided by Dreman 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 anticipated efforts to promote the Fund and grow its assets. The trustees considered Dreman’s continuity of, and |
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commitment to retain, qualified personnel and Dreman’s commitment to maintain and enhance its resources and systems. The Trustees considered Dreman’s personnel, including the education and experience of Dreman’s personnel. With regard to personnel changes, the Trustees discussed the recent departure of the firm’s Chief Investment Officer and the fact that the firm recently hired an individual in the compliance department. After considering the foregoing information and further information in the meeting materials provided by Dreman (including Dreman’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 Dreman 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 Dreman, the trustees compared the one-month, three-month, one-year, year-to-date, and since inception performance of the Fund for the periods ending October 31, 2015 with the performance of funds with similar objectives managed by other investment advisers, as well as with aggregated peer group data. They also compared the performance of the Fund during various longer periods with the performance of the Fund’s benchmark as of September 30, 2015. The trustees also considered the consistency of Dreman’s management of the Fund with its investment objective, strategies, and limitations. The trustees noted that the Fund performed above average in its peer group category during the periods reviewed, and outperformed the benchmark during the three-year, ten-year and since inception periods. They also noted that the Fund slightly underperformed as compared to the index for the one-year and five-year period ended September 30, 2015. The trustees also considered the Fund’s performance relative to the performance of Dreman’s private accounts managed similarly to the Fund based on recent data and observed that the Fund performed comparably to those other accounts. After reviewing and discussing the investment performance of the Fund further, Dreman’s experience managing the Fund, Dreman’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 Dreman was acceptable. |
3. | The costs of the services to be provided and 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 Dreman from the relationship with the Fund, the Trustees considered: (1) Dreman’s financial condition; (2) 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 Dreman regarding its profits associated with managing the Fund. The trustees also considered potential benefits for Dreman 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 was lower than the average and median fees for the Fund’s peer group category. They also noted that the Fund’s net operating expenses were below the average and median of its peer group. The trustees also noted that Dreman had contractually committed to limit the |
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Investment Advisory Agreement Approval (Unaudited) (Continued)
operating expenses of the Fund. Based on the foregoing, the Board concluded that the fees to be paid to Dreman by the Fund and the profits to be realized by Dreman, in light of all the facts and circumstances, were fair and reasonable in relation to the nature and quality of the services provided by Dreman. |
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 Dreman. The Board considered that while the management fee remained the same at all asset levels, the Fund’s shareholders had experienced benefits from other service provider relationships with the Fund. The trustees also noted that Dreman had historically kept an expense limitation arrangement in place and was continuing to do so at this time. The trustees noted that these arrangements have similar benefits to breakpoints, but that they actually protected shareholders more than breakpoints in that they ensure expenses are maintained at a particular level even if the assets of the Fund were to decline. The trustees noted that the Fund was not, because of its current asset level, experiencing the benefits of the expense limitation arrangement at this time although they noted that the arrangement provided value to the relationship and should be taken into consideration when considering this particular factor. 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 Dreman. |
5. | Possible conflicts of interest and benefits to the Adviser. In considering Dreman’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 Dreman’s other accounts; and the substance and administration of Dreman’s code of ethics. The trustees also considered disclosure in the registration statement of the Trust relating to Dreman’s potential conflicts of interest. The trustees noted that Dreman does not anticipate any indirect benefits from its relationship with the Fund, and Dreman does not engage in soft dollar arrangements. Based on the foregoing, the Board determined that Dreman’s standards and practices of Dreman relating to the identification and mitigation of potential conflicts of interest were satisfactory. |
After additional consideration of the factors delineated in the memorandum provided by counsel and further discussion among the Board members, the Board determined to approve the continuation of the Agreement between the Trust and the Adviser.
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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 (800) 247-1014 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
Foundry Partners, LLC
510 First Avenue North, Suite 409
Minneapolis, MN 55403
DISTRIBUTOR
Unified Financial Securities, LLC
9465 Counselors Row, Suite 200
Indianapolis, IN 46240
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
225 Pictoria Drive, Suite 450
Cincinnati, OH 45246
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
DANA LARGE CAP EQUITY FUND
DANA SMALL CAP EQUITY FUND
Semi-Annual Report
April 30, 2016
Dana Investment Advisors, Inc.
15800 Bluemound Rd., Suite 250
Brookfield, WI 53005
(855) 280-9648
www.danafunds.com
Dear Fellow Shareholders:
Enclosed is the Semi-Annual report for the Dana Funds. The beginning of the new fiscal year coincided with the launch of the Dana Small Cap Equity Fund (the “Small Cap Fund”). We are excited to expand our offerings and felt this fit with the natural progression and growth of the Dana Funds. The Small Cap Fund has grown to approximately $8 million in six months. Combined with the Dana Large Cap Equity Fund (the “‘Large Cap Fund”), the assets in the Dana Funds now total approximately $191 million. In the first six months of the fiscal year we saw assets grow by 21%. In the paragraphs below, you will find a recap of the market environment and performance of each mutual fund. On behalf of the investment adviser, Dana Investment Advisors, we would like to thank you for your continued investment and support. As always, we welcome your comments and questions, and you may reach us via email at DanaFunds@danainvestment.com.
Market Recap:
U.S. stocks were essentially flat for the first half of the Fund’s fiscal year (November 1, 2015 to April 30, 2016), with the S&P 500® Index (“S&P 500”) returning 0.43% during the period – although the six months were marked by volatility. From November 2015 through February 11, 2016, the S&P 500 fell -11.4%. Investors pivoted and drove the S&P 500 up 13.4% from February 12, 2016, through the end of April. Small cap, mid cap, and international equities experienced even wider swings. Concerns centered on slowing growth in China and the Federal Reserve Vice Chair’s pronouncements of an intent to raise U.S. interest rates. Japan’s adoption of negative interest rates exacerbated worries. Aside from the external factors affecting domestic equities, perhaps the biggest driver has been negative earnings growth trends. S&P 500 year-over-year earnings per share growth has been negative for six consecutive quarters. Janet Yellen’s congressional testimony in February helped stabilize equities, and Jamie Dimon’s large personal purchase of JP Morgan Chase & Co. stock seemed to signal the turning point in the equity markets. Also, earnings growth trends are expected to improve and return to positive territory as 2016 advances.
Dana Large Cap Equity Performance:
Performance in the Large Cap Fund lagged the S&P 500 over the November 1, 2015 to April 30, 2016 period as a number of market headwinds emerged. 2015 was a year in which market leadership was concentrated in a select group of large, high-growth (and very high valuation) companies. While the S&P 500 was up +1.38% in 2015, most stocks in the index were negative during the year. The equal- weighted S&P 500 was down -2.20%, and the Russell 1000 Growth® Index outperformed the Russell 1000 Value® Index by +9.50%.
The first quarter of 2016 was defined by an abrupt internal market reversal. Market leadership transitioned from 2015’s preferences for growth and mega-cap companies to highly shorted, lower quality names – particularly those exposed to commodities. Given an investment process that prioritizes relative value and quality, neither environment was ideal for the Large Cap Fund’s Strategy. Turnover during the six months was modest as we remain committed to our disciplined process. We will continue to cull underperformers from the portfolio and add companies that have favorable metrics, based on our investment approach.
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As always, security selection is the driver of our performance. During the six months ending April 30, 2016, the top contributors to performance were CMS Energy Corporation, Xcel Energy, Inc., and Prologis, Inc. CMS and Xcel are utilities with consistent historical earnings execution, steady dividend growth, and favorable regulatory environments. Both stocks outperformed in the first quarter of 2016 as investors favored safety and yield against a relatively weak macroeconomic backdrop. Notably, sector neutral portfolio construction allowed the Large Cap Fund to participate in (and outperform through) the utility company rally while more heavily weighted sectors (e.g. Financials and Information Technology) underperformed. Prologis is a recent addition to the portfolio. The REIT is heavily exposed to e-commerce shipment demand and retail supply chain reconfigurations through its ownership of distribution facilities. A favorable market position and strong distribution growth were buoyed by the market’s preference for yield. The Utilities sector was the strongest performing sector on a relative basis, and the second strongest performing sector on an absolute basis. The Telecommunications sector posted the strongest absolute returns.
The biggest detractor from the Large Cap Fund’s performance was Royal Caribbean Cruises Ltd. Royal Caribbean entered a consolidation period following strong 2015 performance as conservative 2016 guidance surprised the market. The next largest detractors from Fund performance were Macy’s, Inc. and Tesoro Corporation. Macy’s operated in a highly promotional retail environment that resulted from the combined effects of e-commerce, weather, and stale apparel assortment. The position in Macy’s was sold in December. Tesoro, similar to Royal Caribbean, was a strong 2015 performer. The company’s underperformance in the last six months reflected narrowing crack spreads in a rising crude price environment. Tesoro’s exposure to midstream production and retail gasoline sales could mitigate these factors over the long-term. The Consumer Discretionary sector produced the weakest relative and absolute returns during the last six months.
Dana Small Cap Equity Performance:
Performance in the Small Cap Fund lagged the Russell 2000® Index over the November 1, 2015 to April 30, 2016 period. The equity markets were rather erratic over this time period with volatile swings in investor sentiment. The Small Cap Fund did provide downside protection during the market sell-off in December 2015 and January 2016 although it had a difficult time outperforming when the equity markets rebounded beginning in early February 2016. The rally beginning in February was led by some of the past year’s worst performing sectors (such as Energy and Materials) and low-quality stocks. It’s not unusual for our investment style to face headwinds when low quality stocks are outperforming, thankfully these types of environments tend to be short lived as investors tend to favor fundamentals over speculation in the long term.
During the six months ended April 30, 2016, the top sector contributors included Health Care and Energy. Top individual contributors were CoreSite Realty Corporation, Ligand Pharmaceuticals, Inc., AMN Healthcare Services, Inc., and Hawaiian Holdings, Inc. CoreSite is a Real Estate Investment Trust (REIT) that manages data centers housing networking, storage, and communications technology infrastructure. The REIT is a beneficiary of the exponential growth in digital data creation and use and has experienced 25% annualized growth in funds from operations (FFO) over the past three years. AMN, also benefiting from secular tailwinds, is the nation’s largest healthcare staffing provider. Healthcare reform, aging healthcare professionals, rising healthcare spending and an aging population are leading demand for the company’s services. Ligand is a biopharmaceutical
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company that develops and acquires royalty rights to a variety of drugs. The company has 13 approved products, 85 partners, and an exciting pipeline that management believes will double revenue to nearly $2.5 billion over the next two years. Hawaiian Airlines is the largest provider of service to Hawaii and serves many Asian hubs as well. Low oil prices, strong ticket pricing, and efficient capacity growth have driven earnings and investor enthusiasm for the stock.
The largest sector detractor was Information Technology. Significant individual detractors to performance were Lannett Company, Inc., AMAG Pharmaceuticals, Inc., Infinera Corporation, and Asbury Automotive Group, Inc. Lannett is a generic drug developer and manufacturer plagued by a string of bad news, including the loss of a major customer at a company pending their acquisition, weaker than expected sales and delayed product launches. AMAG develops and commercializes biopharmaceutical therapies with an emphasis on treating iron deficiency. Shares were weighted down by an FDA request for information relating to manufacturing procedures for one of the company’s drugs and worries over lower-priced generic competitors challenging sales. Infinera provides optical transport networking equipment. Communications equipment companies were among the worst performing industries within technology from November 2015 to April 2016, and Infinera was not immune to weakness in the group. The company experienced slowing purchasing trends among major customers. Asbury Automotive is one of the largest automotive retailers in the U.S. with over 85% of sales from import brands. The company’s cost structure and rising inventories sent margins and earnings revisions lower.
As we mentioned in the past, our shareholders are key to our continued success, and we take seriously the trust you have placed in us. Attractive opportunities continue to be present in the equity markets, and our process, which we have successfully implemented since 1999, has led to success in the Large Cap Fund over full market cycles. Warren Buffet once said, ‘The stock market is a device for transferring money from the impatient to the patient.” We remain patient and believe that our holdings with solid fundamental characteristics will be rewarded over the long term.
Respectfully submitted,
Mark R. Mirsberger, CPA
Chief Executive Officer – Dana Investment Advisors, Inc.
Duane Roberts, CFA
Portfolio Manager and Director of Equities – Dana Investment Advisors, Inc.
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Investment Results (Unaudited)
Total Returns(a) as of April 30, 2016
Six Months | One Year | Three Year | Five Year | Since Inception (3/1/10) | Since Inception (7/28/10) | Since Inception (10/29/13) | ||||||||||||||||||||||
Dana Large Cap Equity Fund |
| |||||||||||||||||||||||||||
Class A with Load | (8.42)% | (9.89)% | 6.83% | 7.23% | N/A | 10.84% | N/A | |||||||||||||||||||||
Class A without Load | (3.58)% | (5.14)% | 8.68% | 8.33% | N/A | 11.83% | N/A | |||||||||||||||||||||
Class N | (3.62)% | (5.16)% | 8.77% | 8.45% | 12.80% | N/A | N/A | |||||||||||||||||||||
Institutional Class | (3.45)% | (4.86)% | N/A | N/A | N/A | N/A | 6.58% | |||||||||||||||||||||
S&P 500® Index(b) | 0.43% | 1.21% | 11.26% | 11.02% | 13.04% | 13.71% | 8.81% | |||||||||||||||||||||
Expense Ratios(c) | ||||||||||||||||||||||||||||
Class A | Class N | Institutional Class | ||||||||||||||||||||||||||
Gross | 1.25% | 1.25% | 1.00% | |||||||||||||||||||||||||
With Applicable Waivers | 0.98% | 0.98% | 0.73% |
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 Dana Large Cap Equity Fund (the “Large Cap Fund”) distributions or the redemption of Large Cap Fund shares. Current performance of the Large Cap Fund may be lower or higher than the performance quoted. The Large Cap Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. Performance data current to the most recent month end may be obtained by calling 1-855-280-9648.
(a) Return figures reflect any change in price per share and assume the reinvestment of all distributions. Returns for periods greater than 1 year are annualized. The Large Cap Fund’s returns reflect any fee reductions during the applicable period. If such reductions had not occurred, the quoted performance would have been lower. Returns figures for Class A with load include the maximum 5.00% sales charge.
(b) The S&P 500® Index (“Index”) is widely recognized unmanaged index of equity securities and is representative of a broader domestic equity market and range of securities than is found in the Large Cap Fund’s portfolio. Individuals cannot invest directly in the Index; however, an individual can invest in exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index.
(c) The expense ratios are from the Large Cap Fund’s prospectus dated February 29, 2016. The Dana Investment Advisors, Inc. (the “Adviser”) has contractually agreed to waive or limit its fees and to assume other expenses of the Large Cap Fund until February 28, 2017, so that total annual fund operating expenses does not exceed 0.73%. 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, fees and expenses paid under a shareholder services plan, and indirect expenses (such as “Acquired Funds Fees and Expenses”). Each waiver or reimbursement of an expense by the Adviser is subject to repayment by the Large Cap Fund within three years following the fiscal year in which the expense was incurred, provided that the Large Cap Fund is able to make the repayment without exceeding the expense limitation in place at the time of waiver or reimbursement. This agreement may only be terminated by mutual consent of the Adviser and the Board of Trustees. The amounts subject to potential recoupment by the Adviser prior to the reorganization as a series of the Valued Advisers Trust are not subject to recoupment. Additional information pertaining to the Large Cap Fund’s expense ratios as of April 30, 2016 can be found on the financial highlights.
The Large Cap 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 Large Cap Fund and may be obtained by calling the same number as above. Please read it carefully before investing.
The Large Cap Fund is distributed by Unified Financial Securities, LLC, member FINRA.
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Investment Results (Unaudited)
Total Return(a) as of April 30, 2016
Since Inception (11/3/15) | ||||||||
Dana Small Cap Equity Fund |
| |||||||
Institutional Class | (9.00)% | |||||||
Investor Class | (9.23)% | |||||||
Russell 2000® Index (b) | (3.91)% | |||||||
Expense Ratios(c) | ||||||||
Institutional Class | Investor Class | |||||||
Gross | 2.49% | 2.74% | ||||||
With Applicable Waivers | 0.95% | 1.20% |
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 Dana Small Cap Equity Fund (the “Small Cap Fund”) distributions or the redemption of Small Cap Fund shares. Current performance of the Small Cap Fund may be lower or higher than the performance quoted. The Small Cap Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. Performance data current to the most recent month end may be obtained by calling 1-855-280-9648.
(a) Return figures reflect any change in price per share and assume the reinvestment of all distributions. The Small Cap Fund’s returns reflect any fee reductions during the applicable period. If such reductions had not occurred, the quoted performance would have been lower.
(b) The Russell 2000® Index (“Index”) is a widely recognized unmanaged index of equity securities and is representative of a broader domestic equity market and range of securities than are found in the Small Cap Fund’s portfolio. Individuals can not invest directly in the Index; however, an individual can invest in ETFs or other investment vehicles that attempt to track the performance of a benchmark index.
(c) The expense ratios are from the Small Cap Fund’s prospectus dated February 29, 2016. The Adviser has contractually agreed to waive or limit its fees and to assume other expenses of the Small Cap Fund until February 28, 2017, so that total annual fund operating expenses does not exceed 0.95%. 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, fees and expenses paid under a shareholder services plan, and indirect expenses (such as “Acquired Funds Fees and Expenses”). Each waiver or reimbursement of an expense by the Adviser is subject to repayment by the Small Cap Fund within three years following the fiscal year in which the expense was incurred, provided that the Small Cap Fund is able to make the repayment without exceeding the expense limitation in place at the time of waiver or reimbursement. This agreement may only be terminated by mutual consent of the Adviser and the Board of Trustees. The amounts subject to potential recoupment by the Adviser prior to the reorganization as a series of the Valued Advisers Trust are not subject to recoupment. Additional information pertaining to the Small Cap Fund’s expense ratios as of April 30, 2016 can be found on the financial highlights.
The Small Cap 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 Small Cap Fund and may be obtained by calling the same number as above. Please read it carefully before investing.
The Small Cap Fund is distributed by Unified Financial Securities, LLC, member FINRA.
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Portfolio Illustration (Unaudited)
April 30, 2016
The following chart gives a visual breakdown of the Large Cap Fund by sector weighting as a percentage of the fair value of portfolio investments.
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Portfolio Illustration (Unaudited)
April 30, 2016
The following chart gives a visual breakdown of the Small Cap Fund by sector weighting as a percentage of the fair value of portfolio investments.
Availability of Portfolio Schedule – (Unaudited)
The Large Cap Fund and the Small Cap Fund (each a “Fund” and collectively the “Funds”) files their complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Form N-Q is available at the SEC’s website at www.sec.gov. The Funds’ Form N-Q may be reviewed and copied at the Public Reference Room in Washington DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
7
Summary of Funds’ Expenses – (Unaudited)
As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and short-term redemption fees and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
Each Fund’s example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (November 1, 2015 through April 30, 2016).
Actual Expenses
The first line of the table for each class provides information about actual account values and actual expenses. You may use the information in these lines, 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 Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table for each class provides information about hypothetical account values and hypothetical expenses based on each 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 balances or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds 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.
Expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as the fee imposed on sales charges and short-term redemptions. Therefore, the second line of the table for each class is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if transaction costs were included, your costs would have been higher.
8
Summary of Fund’s Expenses – (Unaudited) (continued)
Beginning Account Value, November 1, 2015 | Ending Account Value, April 30, 2016 | Expenses Paid During Period(a) | Annualized Expense Ratio | |||||||||||||||
Dana Large Cap Equity Fund | ||||||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 964.20 | $ | 4.79 | 0.98 | % | |||||||||
Hypothetical(b) | $ | 1,000.00 | $ | 1,019.99 | $ | 4.92 | 0.98 | % | ||||||||||
Class N | Actual | $ | 1,000.00 | $ | 963.80 | $ | 4.78 | 0.98 | % | |||||||||
Hypothetical(b) | $ | 1,000.00 | $ | 1,019.99 | $ | 4.92 | 0.98 | % | ||||||||||
Institutional Class | Actual | $ | 1,000.00 | $ | 965.50 | $ | 3.57 | 0.73 | % | |||||||||
Hypothetical(b) | $ | 1,000.00 | $ | 1,021.23 | $ | 3.67 | 0.73 | % |
Beginning Account Value, November 3, 2015 | Ending Account Value, April 30, 2016 | Expenses Paid During Period(c) | Annualized Expense Ratio | |||||||||||||||
Dana Small Cap Equity Fund | ||||||||||||||||||
Institutional Class | Actual | $ | 1,000.00 | $ | 910.00 | $ | 4.46 | 0.95 | % | |||||||||
Hypothetical(b) | $ | 1,000.00 | $ | 1,020.14 | $ | 4.77 | 0.95 | % | ||||||||||
Investor Class | Actual | $ | 1,000.00 | $ | 907.70 | $ | 5.63 | 1.20 | % | |||||||||
Hypothetical(b) | $ | 1,000.00 | $ | 1,018.90 | $ | 6.02 | 1.20 | % |
(a) | Expenses are equal to the Fund’s annualized expense ratios, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). The annualized expense ratios reflect reimbursement of expenses by the Fund’s investment adviser for the period beginning November 1, 2015 to April 30, 2016. The “Financial Highlights” tables in the Fund’s financial statements, included in this report, also show the gross expense ratios, without such reimbursements. |
(b) | Hypothetical assumes 5% annual return before expenses. |
(c) | Actual expenses are equal to the Fund’s annualized expense ratios, multiplied by the average account value over the period, multiplied by 180/366 (to reflect the period since commencement of operations on November 3, 2015). The annualized expense ratios reflect reimbursement of expenses by the Fund’s investment adviser for the period beginning November 3, 2015 through April 30, 2016. The “Financial Highlights” tables in the Funds’ financial statements, included in the report, also show the gross expense ratios, without such reimbursements. Hypothetical expenses are equal to the Fund’s annualized expense ratios, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). The annualized expense ratios reflect reimbursement of expenses by the Fund’s investment adviser for the period beginning November 1, 2015 to April 30, 2016. |
9
Dana Large Cap Equity Fund
Schedule of Investments
April 30, 2016 (Unaudited)
Shares | Fair Value | |||||||
Common Stocks – 98.69% | ||||||||
Consumer Discretionary – 12.50% | ||||||||
54,000 | Comcast Corp. – Class A | $ | 3,281,040 | |||||
98,000 | D.R. Horton, Inc. | 2,945,880 | ||||||
140,000 | Interpublic Group of Cos., Inc. | 3,211,600 | ||||||
31,000 | Lear Corp. | 3,569,030 | ||||||
43,000 | Lowe’s Companies, Inc. | 3,268,860 | ||||||
40,000 | Royal Caribbean Cruises Ltd. | 3,096,000 | ||||||
44,000 | Target Corp. | 3,498,000 | ||||||
|
| |||||||
22,870,410 | ||||||||
|
| |||||||
Consumer Staples – 10.55% | ||||||||
46,000 | Campbell Soup Co. | 2,838,660 | ||||||
36,000 | CVS Health Corp. | 3,618,000 | ||||||
39,000 | Dr. Pepper Snapple Group, Inc. | 3,545,490 | ||||||
24,000 | Kimberly-Clark Corp. | 3,004,560 | ||||||
92,000 | Kroger Co./The | 3,255,880 | ||||||
61,000 | Reynolds American, Inc. | 3,025,600 | ||||||
|
| |||||||
19,288,190 | ||||||||
|
| |||||||
Energy – 7.05% | ||||||||
30,000 | Chevron Corp. | 3,065,400 | ||||||
38,000 | Exxon Mobil Corp. | 3,359,200 | ||||||
37,000 | Schlumberger Ltd. | 2,972,580 | ||||||
33,000 | Spectra Energy Corp. | 1,031,910 | ||||||
25,000 | Tesoro Corp. | 1,992,250 | ||||||
8,000 | Valero Energy Corp. | 470,960 | ||||||
|
| |||||||
12,892,300 | ||||||||
|
| |||||||
Financials – 12.04% | ||||||||
38,000 | Ameriprise Financial, Inc. | 3,644,200 | ||||||
79,400 | Hartford Financial Services Group, Inc./The | 3,523,772 | ||||||
60,000 | JPMorgan Chase & Co. | 3,792,000 | ||||||
54,000 | Nasdaq, Inc. | 3,332,340 | ||||||
98,000 | SunTrust Banks, Inc. | 4,090,520 | ||||||
73,000 | Wells Fargo & Co. | 3,648,540 | ||||||
|
| |||||||
22,031,372 | ||||||||
|
| |||||||
Health Care – 14.79% | ||||||||
56,000 | AbbVie, Inc. | 3,416,000 | ||||||
28,500 | Aetna, Inc. | 3,199,695 | ||||||
22,400 | Amgen, Inc. | 3,545,920 | ||||||
41,000 | Cardinal Health, Inc. | 3,216,860 | ||||||
33,800 | Gilead Sciences, Inc. | 2,981,498 | ||||||
29,400 | Johnson & Johnson | 3,295,152 | ||||||
92,000 | Pfizer, Inc. | 3,009,320 | ||||||
43,600 | STERIS PLC | 3,081,212 | ||||||
10,000 | UnitedHealth Group, Inc. | 1,316,800 | ||||||
|
| |||||||
27,062,457 | ||||||||
|
| |||||||
Industrials – 10.24% | ||||||||
45,800 | Alaska Air Group, Inc. | 3,225,694 | ||||||
28,000 | Boeing Co./The | 3,774,400 |
See accompanying notes which are an integral part of the financial statements.
10
Dana Large Cap Equity Fund
Schedule of Investments (continued)
April 30, 2016 (Unaudited)
Shares | Fair Value | |||||||
Common Stocks – (continued) | ||||||||
Industrials – 10.24% (continued) | ||||||||
25,400 | General Dynamics Corp. | $ | 3,569,208 | |||||
113,000 | General Electric Co. | 3,474,750 | ||||||
26,000 | Masco Corp. | 798,460 | ||||||
34,800 | Stanley Black & Decker, Inc. | 3,894,816 | ||||||
|
| |||||||
18,737,328 | ||||||||
|
| |||||||
Information Technology – 18.85% | ||||||||
4,800 | Alphabet, Inc. – Class A * | 3,397,824 | ||||||
60,000 | Amdocs Ltd. | 3,392,400 | ||||||
34,000 | Apple, Inc. | 3,187,160 | ||||||
62,000 | Broadridge Financial Solutions, Inc. | 3,710,080 | ||||||
88,000 | CDW Corp. | 3,388,000 | ||||||
134,000 | Cisco Systems, Inc. | 3,683,660 | ||||||
57,000 | Electronic Arts, Inc. * | 3,525,450 | ||||||
48,000 | Lam Research Corp. | 3,667,200 | ||||||
68,000 | Microsoft Corp. | 3,391,160 | ||||||
47,000 | Skyworks Solutions, Inc. | 3,140,540 | ||||||
|
| |||||||
34,483,474 | ||||||||
|
| |||||||
Materials – 2.77% | ||||||||
31,000 | Lyondellbasell Industries NV – Class A | 2,562,770 | ||||||
53,000 | Sealed Air Corp. | 2,510,080 | ||||||
|
| |||||||
5,072,850 | ||||||||
|
| |||||||
Real Estate Investment Trusts – 3.87% | ||||||||
102,000 | Omega Healthcare Investors, Inc. | 3,444,540 | ||||||
80,000 | Prologis, Inc. | 3,632,800 | ||||||
|
| |||||||
7,077,340 | ||||||||
|
| |||||||
Telecommunication Services – 2.74% | ||||||||
66,000 | AT&T, Inc. | 2,562,120 | ||||||
48,000 | Verizon Communications, Inc. | 2,445,120 | ||||||
|
| |||||||
5,007,240 | ||||||||
|
| |||||||
Utilities – 3.29% | ||||||||
74,000 | CMS Energy Corp. | 3,010,320 | ||||||
75,000 | Xcel Energy, Inc. | 3,002,250 | ||||||
|
| |||||||
6,012,570 | ||||||||
|
| |||||||
Total Common Stocks (Cost $175,242,087) | 180,535,531 | |||||||
|
| |||||||
Short-Term Investments – 1.29% | ||||||||
2,360,626 | Fidelity Institutional Money Market Portfolio – Institutional Class, 0.37% (a) | 2,360,626 | ||||||
|
| |||||||
Total Short-Term Investments (Cost $2,360,626) | 2,360,626 | |||||||
|
| |||||||
Total Investments – 99.98% (Cost $177,602,713) | 182,896,157 | |||||||
|
| |||||||
Other Assets in Excess of Liabilities – 0.02% | 28,484 | |||||||
|
| |||||||
NET ASSETS – 100.00% | $ | 182,924,641 | ||||||
|
|
(a) | Rate disclosed is the seven day yield as of April 30, 2016. |
* | Non-income producing security. |
The sectors shown on the schedule of investments are based on the 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 Ultimus Asset Services, LLC.
See accompanying notes which are an integral part of the financial statements.
11
Dana Small Cap Equity Fund
Schedule of Investments
April 30, 2016 (Unaudited)
Shares | Fair Value | |||||||
| Common Stocks – 97.44% |
| ||||||
Consumer Discretionary – 13.46% | ||||||||
8,517 | American Axle & Manufacturing Holdings, Inc. * | $ | 132,099 | |||||
3,071 | BJ’s Restaurants, Inc. * | 136,967 | ||||||
2,170 | Columbia Sportswear Co. | 127,097 | ||||||
6,727 | Express, Inc. * | 122,297 | ||||||
2,865 | G-III Apparel Group Ltd. * | 129,641 | ||||||
4,110 | Sinclair Broadcast Group, Inc. – Class A | 131,808 | ||||||
3,795 | Sonic Corp. | 130,434 | ||||||
1,005 | Vail Resorts, Inc. | 130,288 | ||||||
|
| |||||||
1,040,631 | ||||||||
|
| |||||||
Consumer Staples – 1.65% | ||||||||
1,143 | Casey’s General Stores, Inc. | 128,016 | ||||||
|
| |||||||
Energy – 2.29% | ||||||||
4,610 | Matrix Service Co. * | 86,852 | ||||||
1,432 | PDC Energy, Inc. * | 89,915 | ||||||
|
| |||||||
176,767 | ||||||||
|
| |||||||
Financials – 16.84% | ||||||||
2,711 | AMERISAFE, Inc. | 146,069 | ||||||
3,194 | Bank of the Ozarks, Inc. | 131,912 | ||||||
5,300 | Encore Capital Group, Inc. * | 149,195 | ||||||
5,862 | First Merchants Corp. | 150,360 | ||||||
3,392 | Home BancShares, Inc. | 145,822 | ||||||
2,751 | Pinnacle Financial Partners, Inc. | 135,267 | ||||||
3,027 | Primerica, Inc. | 150,018 | ||||||
4,297 | Renasant Corp. | 147,559 | ||||||
2,085 | South State Corp. | 145,908 | ||||||
|
| |||||||
1,302,110 | ||||||||
|
| |||||||
Health Care – 15.69% | ||||||||
3,363 | AMN Healthcare Services, Inc. * | 119,420 | ||||||
7,357 | DepoMed, Inc. * | 127,865 | ||||||
2,985 | Emergent BioSolutions, Inc. * | 114,982 | ||||||
5,020 | Globus Medical, Inc. – Class A * | 125,701 | ||||||
949 | Ligand Pharmaceuticals, Inc. – Class B * | 114,706 | ||||||
3,861 | Natus Medical, Inc. * | 123,050 | ||||||
1,799 | PAREXEL International Corp. * | 109,919 | ||||||
2,250 | Prestige Brands Holdings, Inc. * | 127,755 | ||||||
7,304 | Supernus Pharmaceuticals, Inc. * | 125,337 | ||||||
1,978 | VCA, Inc. * | 124,555 | ||||||
|
| |||||||
1,213,290 | ||||||||
|
| |||||||
Industrials – 11.46% | ||||||||
2,257 | Apogee Enterprises, Inc. | 93,530 | ||||||
2,661 | Astronics Corp. * | 98,324 | ||||||
3,101 | Comfort Systems USA, Inc. | 91,448 | ||||||
1,530 | Dycom Industries, Inc. * | 108,018 | ||||||
3,964 | Echo Global Logistics, Inc. * | 92,639 | ||||||
2,028 | Hawaiian Holdings, Inc. * | 85,318 | ||||||
10,023 | Mueller Water Products, Inc. | 107,747 | ||||||
1,863 | Multi-Color Corp. | 111,463 | ||||||
2,138 | Patrick Industries, Inc. * | 98,027 | ||||||
|
| |||||||
886,514 | ||||||||
|
|
See accompanying notes which are an integral part of the financial statements.
12
Dana Small Cap Equity Fund
Schedule of Investments (continued)
April 30, 2016 (Unaudited)
Shares | Fair Value | |||||||
| Common Stocks – (continued) |
| ||||||
Information Technology – 17.85% | ||||||||
5,439 | ARRIS International PLC * | $ | 123,846 | |||||
2,928 | Blackhawk Network Holdings, Inc. * | 94,077 | ||||||
6,647 | Ciena Corp. * | 111,869 | ||||||
4,318 | Convergys Corp. | 114,427 | ||||||
1,545 | EPAM Systems, Inc. * | 112,677 | ||||||
1,605 | Euronet Worldwide, Inc. * | 123,746 | ||||||
3,913 | Gigamon, Inc. * | 127,525 | ||||||
7,898 | Infinera Corp. * | 93,907 | ||||||
5,947 | Integrated Device Technology, Inc. * | 114,658 | ||||||
6,570 | Jabil Circuit, Inc. | 114,055 | ||||||
2,066 | Manhattan Associates, Inc. * | 125,076 | ||||||
8,974 | Rudolph Technologies, Inc. * | 124,469 | ||||||
|
| |||||||
1,380,332 | ||||||||
|
| |||||||
Materials – 4.03% | ||||||||
2,859 | Berry Plastics Group, Inc. * | 102,981 | ||||||
3,761 | Chemtura Corp. * | 104,744 | ||||||
1,597 | Neenah Paper, Inc. | 103,949 | ||||||
|
| |||||||
311,674 | ||||||||
|
| |||||||
Real Estate Investment Trusts – 9.08% | ||||||||
8,049 | Colony Capital, Inc.–Class A | 142,306 | ||||||
1,959 | CoreSite Realty Corp. | 146,788 | ||||||
5,100 | Pebblebrook Hotel Trust | 140,964 | ||||||
1,242 | Sovran Self Storage, Inc. | 131,925 | ||||||
12,323 | Summit Hotel Properties, Inc. | 140,482 | ||||||
|
| |||||||
702,465 | ||||||||
|
| |||||||
Telecommunications – 1.03% | ||||||||
4,821 | Inteliquent, Inc. | 79,980 | ||||||
|
| |||||||
Utilities – 4.06% | ||||||||
1,752 | Chesapeake Utilities Corp. | 104,279 | ||||||
3,263 | PNM Resources, Inc. | 103,372 | ||||||
1,634 | Southwest Gas Corp. | 106,063 | ||||||
|
| |||||||
313,714 | ||||||||
|
| |||||||
Total Common Stocks (Cost $7,439,867) | 7,535,493 | |||||||
|
| |||||||
Short-Term Investments – 1.77% | ||||||||
136,885 | Fidelity Institutional Money Market Portfolio – Institutional Class, 0.37% (a) | 136,885 | ||||||
|
| |||||||
Total Short-Term Investments (Cost $136,885) | 136,885 | |||||||
|
| |||||||
Total Investments – 99.21% (Cost $7,576,752) | 7,672,378 | |||||||
|
| |||||||
Other Assets in Excess of Liabilities – 0.79% | 60,899 | |||||||
|
| |||||||
NET ASSETS – 100.00% | $ | 7,733,277 | ||||||
|
|
(a) | Rate disclosed is the seven day yield as of April 30, 2016. |
* | Non-income producing security. |
The sectors shown on the schedule of investments are based on the 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 Ultimus Asset Services, LLC.
See accompanying notes which are an integral part of the financial statements.
13
Dana Funds
Statements of Assets and Liabilities
April 30, 2016 (Unaudited)
Dana Large Cap Equity Fund | Dana Small Cap Equity Fund | |||||||
Assets | ||||||||
Investments in securities at fair value (cost $177,602,713 and $7,576,752) | $ | 182,896,157 | $ | 7,672,378 | ||||
Cash | 23,760 | — | ||||||
Receivable for fund shares sold | 96,527 | 13,210 | ||||||
Receivable for proceeds from redemption fees | 151 | — | ||||||
Dividends receivable | 203,482 | 787 | ||||||
Receivable from Adviser | — | 5,786 | ||||||
Deferred organizational and offering costs | — | 28,914 | ||||||
Prepaid expenses | 32,817 | 13,999 | ||||||
Total Assets | 183,252,894 | 7,735,074 | ||||||
Liabilities | ||||||||
Payable for fund shares redeemed | 204,435 | — | ||||||
Payable to Adviser | 78,968 | — | ||||||
Payable for Distribution Fees | 7,444 | 400 | ||||||
Payable to administrator, fund accountant, and transfer agent | 16,936 | 703 | ||||||
Payable to trustees | 2,044 | 668 | ||||||
Other accrued expenses | 18,426 | 26 | ||||||
Total Liabilities | 328,253 | 1,797 | ||||||
Net Assets | $ | 182,924,641 | $ | 7,733,277 | ||||
Net Assets consist of: | ||||||||
Paid-in capital | $ | 185,255,920 | $ | 7,842,110 | ||||
Accumulated undistributed net investment income (loss) | 270,250 | (244 | ) | |||||
Accumulated undistributed net realized loss from investment transactions | (7,894,973 | ) | (204,215 | ) | ||||
Net unrealized appreciation on investments | 5,293,444 | 95,626 | ||||||
Net Assets | $ | 182,924,641 | $ | 7,733,277 |
14
See accompanying notes which are an integral part of these financial statements.
Dana Funds
Statements of Assets and Liabilities (continued)
April 30, 2016 (Unaudited)
Dana Large Cap Equity Fund | Dana Small Cap Equity Fund | |||||||
Class N: | ||||||||
Net Assets | $ | 34,430,647 | ||||||
Shares outstanding | 1,970,811 | |||||||
Net asset value (“NAV”) and offering price per share | $ | 17.47 | ||||||
Minimum redemption price per share (NAV * 98%) (a) | $ | 17.12 | ||||||
Class A: | ||||||||
Net Assets | $ | 1,147,617 | ||||||
Shares outstanding | 65,809 | |||||||
Net asset value (“NAV”) per share | $ | 17.44 | ||||||
Maximum offering price per share (NAV/0.95) (b) | $ | 18.36 | ||||||
Minimum redemption price per share (NAV * 98%) (a) | $ | 17.09 | ||||||
Institutional Class: | ||||||||
Net Assets | $ | 147,346,377 | $ | 5,706,964 | ||||
Shares outstanding | 8,434,981 | 628,055 | ||||||
Net asset value (“NAV”) and offering price per share | $ | 17.47 | $ | 9.09 | ||||
Minimum redemption price per share (NAV * 98%) (a) | $ | 17.12 | $ | 8.91 | ||||
Investor Class: | ||||||||
Net Assets | $ | 2,026,313 | ||||||
Shares outstanding | 223,362 | |||||||
Net asset value (“NAV”) and offering price per share | $ | 9.07 | ||||||
Minimum redemption price per share (NAV * 98%) (a) | $ | 8.89 |
(a) | The Funds charge a 2.00% redemption fee on shares redeemed within 60 days of purchase. |
(b) | Class A shares impose a maximum 5.00% sales charge on purchases. |
See accompanying notes which are an integral part of these financial statements.
15
Dana Funds
Statements of Operations
For the six months ended April 30, 2016 (Unaudited)
Dana Large Cap Equity Fund | Dana Small Cap Equity Fund(a) | |||||||
Investment Income | ||||||||
Dividend income (net of foreign taxes withheld of $1,881 and $84) | $ | 1,929,600 | $ | 21,339 | ||||
Total investment income | 1,929,600 | 21,339 | ||||||
Expenses | ||||||||
Investment Adviser | 583,899 | 14,712 | ||||||
Distribution (12b-1): | ||||||||
Class N | 43,583 | — | ||||||
Class A | 1,785 | — | ||||||
Investor Class | — | 1,512 | ||||||
Administration | 45,892 | 18,953 | ||||||
Fund accounting | 25,495 | 15,000 | ||||||
Transfer agent | 25,684 | 11,797 | ||||||
Legal | 11,428 | 8,411 | ||||||
Registration | 30,796 | 658 | ||||||
Custodian | 12,603 | 5,181 | ||||||
Audit | 8,228 | 8,119 | ||||||
Trustee | 3,818 | 1,987 | ||||||
Insurance | 8,338 | — | ||||||
Pricing | 1,184 | 907 | ||||||
Printing | 8,175 | 178 | ||||||
Offering | — | 23,644 | ||||||
Organizational | — | 4,304 | ||||||
24f-2 | 232 | 255 | ||||||
Miscellaneous | 4,732 | 3,015 | ||||||
Total expenses | 815,872 | 118,633 | ||||||
Fees contractually waived by Adviser | (161,686 | ) | (55,435 | ) | ||||
Fees waived by the Administrator | — | (44,030 | ) | |||||
Net operating expenses | 654,186 | 19,168 | ||||||
Net investment income | 1,275,414 | 2,171 | ||||||
Net Realized and Unrealized Gain (Loss) on Investments | ||||||||
Net realized loss on investment securities transactions | (6,376,690 | ) | (204,215 | ) | ||||
Net change in unrealized appreciation (depreciation) of investment securities | (906,158 | ) | 95,626 | |||||
Net realized and unrealized loss on investments | (7,282,848 | ) | (108,589 | ) | ||||
Net decrease in net assets resulting from operations | $ | (6,007,434 | ) | $ | (106,418 | ) |
(a) | For the period November 3, 2015 (commencement of operations) through April 30, 2016. |
16
See accompanying notes which are an integral part of these financial statements.
Dana Funds
Statements of Changes in Net Assets
Dana Large Cap Equity Fund | Dana Small Cap Equity Fund | |||||||||||
For the Six Months Ended April 30, 2016 | For the Year Ended October 31, 2015 | For the Period Ended April 30, 2016(a) | ||||||||||
Increase in Net Assets due to: Operations: |
| |||||||||||
Net investment income | $ | 1,275,414 | $ | 1,145,661 | $ | 2,171 | ||||||
Net realized loss on investment securities transactions | (6,376,690 | ) | (1,513,521 | ) | (204,215 | ) | ||||||
Net change in unrealized appreciation (depreciation) of investments securities | (906,158 | ) | 918,692 | 95,626 | ||||||||
Net increase (decrease) in net assets resulting from operations | (6,007,434 | ) | 550,832 | (106,418 | ) | |||||||
Distributions From: | ||||||||||||
Net investment income: | ||||||||||||
Class N | (201,749 | ) | (310,826 | ) | ||||||||
Class A | (6,022 | ) | (12,606 | ) | ||||||||
Institutional Class | (937,090 | ) | (702,819 | ) | (1,828 | ) | ||||||
Investor Class | (587 | ) | ||||||||||
Realized gains: | ||||||||||||
Class N | — | (1,380,628 | ) | |||||||||
Class A | — | (47,055 | ) | |||||||||
Institutional Class | — | (936,609 | ) | — | ||||||||
Total distributions | (1,144,861 | ) | (3,390,543 | ) | (2,415 | ) | ||||||
Capital Transactions – Class N: |
| |||||||||||
Proceeds from shares sold | 1,763,247 | 22,909,588 | ||||||||||
Reinvestment of distributions | 197,929 | 1,276,366 | ||||||||||
Amount paid for shares redeemed | (2,873,011 | ) | (15,880,730 | ) | ||||||||
Proceeds from redemption fees (b) | 241 | 162 | ||||||||||
Total Class N | (911,594 | ) | 8,305,386 | |||||||||
Capital Transactions – Class A: |
| |||||||||||
Proceeds from shares sold | 136,984 | 1,685,300 | ||||||||||
Reinvestment of distributions | 5,689 | 58,595 | ||||||||||
Amount paid for shares redeemed | (1,588,518 | ) | (152,311 | ) | ||||||||
Proceeds from redemption fees (b) | 1,571 | 652 | ||||||||||
Total Class A | (1,444,274 | ) | 1,592,236 |
(a) | For the period November 3, 2015 (commencement of operations) through April 30, 2016. |
(b) | The Funds charge a 2.00% redemption fee on shares redeemed within 60 days of purchase. |
See accompanying notes which are an integral part of these financial statements.
17
Dana Funds
Statements of Changes in Net Assets (continued)
Dana Large Cap Equity Fund | Dana Small Cap Equity Fund | |||||||||||
For the Six Months Ended April 30, 2016 | For the Year Ended October 31, 2015 | For the Period Ended April 30, 2016(a) | ||||||||||
Capital Transactions – Institutional Class: |
| |||||||||||
Proceeds from shares sold | 53,829,941 | 127,938,610 | 6,002,291 | |||||||||
Reinvestment of distributions | 76,055 | 195,472 | 728 | |||||||||
Amount paid for shares redeemed | (18,700,518 | ) | (15,194,601 | ) | (203,717 | ) | ||||||
Proceeds from redemption fees (b) | 3,411 | 63,483 | 1,840 | |||||||||
Total Institutional Class | 35,208,889 | 113,002,964 | 5,801,142 | |||||||||
Capital Transactions – Investor Class: |
| |||||||||||
Proceeds from shares sold | 2,046,107 | |||||||||||
Reinvestment of distributions | 587 | |||||||||||
Amount paid for shares redeemed | (5,726 | ) | ||||||||||
Total Investor Class | 2,040,968 | |||||||||||
Net increase in net assets resulting from capital transactions | 32,853,021 | 122,900,586 | 7,842,110 | |||||||||
Total Increase in Net Assets | 25,700,726 | 120,060,875 | 7,733,277 | |||||||||
Net Assets: | ||||||||||||
Beginning of period | 157,223,915 | 37,163,040 | — | |||||||||
End of period | $ | 182,924,641 | $ | 157,223,915 | $ | 7,733,277 | ||||||
Accumulated net investment income (loss) included in net assets at end of period | $ | 270,250 | $ | 139,697 | $ | (244 | ) |
(a) | For the period November 3, 2015 (commencement of operations) through April 30, 2016. |
(b) | The Funds charge a 2.00% redemption fee on shares redeemed within 60 days of purchase. |
18
See accompanying notes which are an integral part of these financial statements.
Dana Funds
Statements of Changes in Net Assets (continued)
Dana Large Cap Equity Fund | Dana Small Cap Equity Fund | |||||||||||
For the Six Months Ended April 30, 2016 | For the Year Ended October 31, 2015 | For the Period Ended April 30, 2016(a) | ||||||||||
Share Transactions – Class N: |
| |||||||||||
Shares sold | 101,586 | 1,222,207 | ||||||||||
Shares issued in reinvestment of distributions | 11,203 | 69,257 | ||||||||||
Shares redeemed | (167,151 | ) | (840,885 | ) | ||||||||
Total Class N | (54,362 | ) | 450,579 | |||||||||
Share Transactions – Class A: |
| |||||||||||
Shares sold | 7,840 | 94,497 | ||||||||||
Shares issued in reinvestment of distributions | 324 | 3,192 | ||||||||||
Shares redeemed | (88,212 | ) | (8,399 | ) | ||||||||
Total Class A | (80,048 | ) | 89,290 | |||||||||
Share Transactions – Institutional Class: |
| |||||||||||
Shares sold | 3,047,182 | 6,906,834 | 651,988 | |||||||||
Shares issued in reinvestment of distributions | 4,314 | 10,643 | 77 | |||||||||
Shares redeemed | (1,073,239 | ) | (834,286 | ) | (24,010 | ) | ||||||
Total Institutional Class | 1,978,257 | 6,083,191 | 628,055 | |||||||||
Share Transactions – Investor Class: |
| |||||||||||
Shares sold | 223,930 | |||||||||||
Shares issued in reinvestment of distributions | 61 | |||||||||||
Shares redeemed | (629 | ) | ||||||||||
Total Investor Class | 223,362 |
(a) | For the period November 3, 2015 (commencement of operations) through April 30, 2016. |
See accompanying notes which are an integral part of the financial statements.
19
Dana Large Cap Equity Fund – Class N
Financial Highlights
Selected data for a share outstanding throughout each period.
Six Months Ended April 30, 2016 (Unaudited) | Years Ended October 31, | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||
Net asset value, at | $18.23 | $18.54 | $17.19 | $13.88 | $12.50 | $11.83 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.12 | 0.18 | 0.19 | 0.21 | (a) | 0.14 | (a) | 0.09 | (a) | |||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.78 | ) | 0.49 | (b) | 2.46 | 3.40 | 1.51 | 0.67 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.66 | ) | 0.67 | 2.65 | 3.61 | 1.65 | 0.76 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Distributions from: | ||||||||||||||||||||||||
Net investment income | (0.10 | ) | (0.15 | ) | (0.18 | ) | (0.22 | ) | (0.14 | ) | (0.09 | ) | ||||||||||||
Net realized gain | — | (0.83 | ) | (1.12 | ) | (0.08 | ) | (0.13 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from distributions | (0.10 | ) | (0.98 | ) | (1.30 | ) | (0.30 | ) | (0.27 | ) | (0.09 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Redemption fees (c) | — | — | — | — | — | — | ||||||||||||||||||
Net asset value, at | $17.47 | $18.23 | $18.54 | $17.19 | $13.88 | $12.50 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total Return (d) | (3.62 | )%(e) | 3.61 | % | 16.23 | % | 26.35 | % | 13.44 | % | 6.40 | % | ||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||
Net assets at end of period (thousands) | $34,431 | $36,909 | $29,197 | $18,306 | $12,819 | $8,961 | ||||||||||||||||||
Before waiver | ||||||||||||||||||||||||
Ratio of expenses to average net assets | 1.17 | %(f) | 1.25 | % | 1.93 | % | 1.99 | % | 2.30 | % | 3.50 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | 1.16 | %(f) | 0.73 | % | 0.15 | % | 0.32 | % | 0.24 | % | (1.28 | )% | ||||||||||||
After waiver | ||||||||||||||||||||||||
Ratio of expenses to average net assets | 0.98 | %(f) | 0.98 | % | �� | 0.98 | % | 0.98 | % | 1.50 | % | 1.50 | % | |||||||||||
Ratio of net investment income (loss) to average net assets | 1.36 | %(f) | 1.00 | % | 1.09 | % | 1.33 | % | 1.04 | % | 0.72 | % | ||||||||||||
Portfolio turnover (g) | 18 | %(e) | 45 | % | 57 | % | 70 | % | 54 | % | 53 | % |
(a) | Per share net investment income has been determined on the basis of average shares outstanding during the year. |
(b) | The amount shown for a share outstanding throughout the year does not accord with the change in aggregate gains and losses in the portfolio of securities during the year because of the timing of sales and purchases of fund shares in relation to fluctuating market values during the year. |
(c) | The amount is 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 distributions. |
(e) | Not annualized |
(f) | Annualized |
(g) | Portfolio turnover is calculated on the basis on the Fund as a whole without distinguishing among the classes of shares. |
20
See accompanying notes which are an integral part of these financial statements.
Dana Large Cap Equity Fund – Class A
Financial Highlights
Selected data for a share outstanding throughout each period.
Six Months Ended April 30, | ||||||||||||||||||||||||
Years Ended October 31, | ||||||||||||||||||||||||
(Unaudited) | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||||||
Net asset value, at | $18.18 | $18.51 | $17.17 | $13.92 | $12.52 | $11.84 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.13 | (a) | 0.16 | 0.20 | 0.13 | (a) | 0.14 | (a) | 0.08 | (a) | ||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.80 | ) | 0.50 | (b) | 2.44 | 3.39 | 1.52 | 0.67 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from investment operations | (0.67 | ) | 0.66 | 2.64 | 3.52 | 1.66 | 0.75 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Distributions from: | ||||||||||||||||||||||||
Net investment income | (0.09 | ) | (0.16 | ) | (0.18 | ) | (0.19 | ) | (0.13 | ) | (0.07 | ) | ||||||||||||
Net realized gain | — | (0.83 | ) | (1.12 | ) | (0.08 | ) | (0.13 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total from distributions | (0.09 | ) | (0.99 | ) | (1.30 | ) | (0.27 | ) | (0.26 | ) | (0.07 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Redemption fees | 0.02 | — | (c) | — | (c) | — | (c) | — | (c) | — | (c) | |||||||||||||
Net asset value, at | $17.44 | $18.18 | $18.51 | $17.17 | $13.92 | $12.52 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total Return (d) | (3.58 | )%(e) | 3.54 | % | 16.24 | % | 25.67 | % | 13.54 | % | 6.36 | % | ||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||
Net assets at end of period (thousands) | $1,148 | $2,652 | $1,047 | $799 | $678 | $301 | ||||||||||||||||||
Before waiver: | ||||||||||||||||||||||||
Ratio of expenses to average net assets | 1.17 | %(f) | 1.25 | % | 1.93 | % | 1.98 | % | 2.27 | % | 3.11 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | 1.32 | %(f) | 0.73 | % | 0.15 | % | 0.35 | % | 0.22 | % | (0.95 | )% | ||||||||||||
After waiver: | ||||||||||||||||||||||||
Ratio of expenses to average net assets | 0.98 | %(f) | 0.98 | % | 0.98 | % | 1.49 | % | 1.50 | % | 1.50 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | 1.51 | %(f) | 1.00 | % | 1.09 | % | 0.84 | % | 1.00 | % | 0.66 | % | ||||||||||||
Portfolio turnover (g) | 18 | %(e) | 45 | % | 57 | % | 70 | % | 54 | % | 53 | % |
(a) | Per share net investment income has been determined on the basis of average shares outstanding during the period. |
(b) | The amount shown for a share outstanding throughout the year does not accord with the change in aggregate gains and losses in the portfolio of securities during the year because of the timing of sales and purchases of fund shares in relation to fluctuating market values during the year. |
(c) | The amount is 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 distributions and excludes the maximum sales charge. |
(e) | Not annualized |
(f) | Annualized |
(g) | Portfolio turnover is calculated on the basis on the Fund as a whole without distinguishing among the classes of shares. |
See accompanying notes which are an integral part of these financial statements.
21
Dana Large Cap Equity Fund – Institutional Class
Financial Highlights
Selected data for a share outstanding throughout each period.
Six Months Ended April 30, 2016 (Unaudited) | Year Ended October 31, 2015 | Year Ended October 31, 2014 | Period Ended October 31, 2013(a) | |||||||||||||
Net asset value, at | $18.22 | $18.52 | $17.19 | $17.14 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Income from investment operations: | ||||||||||||||||
Net investment income (loss) | 0.14 | (b) | 0.19 | 0.26 | — | (b)(c) | ||||||||||
Net realized and unrealized gain (loss) on investments | (0.77 | ) | 0.52 | (d) | 2.44 | 0.05 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total from investment operations | (0.63 | ) | 0.71 | 2.70 | 0.05 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Distributions from: | ||||||||||||||||
Net investment income | (0.12 | ) | (0.19 | ) | (0.25 | ) | — | |||||||||
Net realized gain | — | (0.83 | ) | (1.12 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total from distributions | (0.12 | ) | (1.02 | ) | (1.37 | ) | — | |||||||||
|
|
|
|
|
|
|
| |||||||||
Redemption fees | — | (c) | 0.01 | — | — | |||||||||||
Net asset value, at | $17.47 | $18.22 | $18.52 | $17.19 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Return (e) | (3.45 | )%(f) | 3.89 | % | 16.60 | % | 0.29 | %(f) | ||||||||
Ratios/Supplemental Data: | ||||||||||||||||
Net assets at end of period (thousands) | $147,346 | $117,663 | $6,919 | $273 | ||||||||||||
Before waiver: | ||||||||||||||||
Ratio of expenses to average net assets | 0.92 | %(g) | 1.00 | % | 1.68 | % | 1.53 | %(g) | ||||||||
Ratio of net investment income (loss) to average net assets | 1.38 | %(g) | 0.98 | % | 0.40 | % | (0.31 | )%(g) | ||||||||
After waiver: | ||||||||||||||||
Ratio of expenses to average net assets | 0.73 | %(g) | 0.73 | % | 0.73 | % | 0.73 | %(g) | ||||||||
Ratio of net investment income (loss) to average net assets | 1.57 | %(g) | 1.25 | % | 1.34 | % | 0.49 | %(g) | ||||||||
Portfolio turnover (h) | 18 | %(f) | 45 | % | 57 | % | 70 | %(f) |
(a) | The Dana Large Cap Equity Fund Institutional Class commenced operations on October 29, 2013. |
(b) | Per share net investment income has been determined on the basis of average shares outstanding during the period. |
(c) | The amount is less than $0.005 per share. |
(d) | The amount shown for a share outstanding throughout the period does not accord with the change in aggregate gains and losses in the portfolio of securities during the period because of the timing of sales and purchases of fund shares in relation to fluctuating market values during the period. |
(e) | 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. |
(f) | Not annualized |
(g) | Annualized |
(h) | Portfolio turnover is calculated on the basis on the Fund as a whole without distinguishing among the classes of shares. |
22
See accompanying notes which are an integral part of these financial statements.
Dana Small Cap Equity Fund – Institutional Class
Financial Highlights
Selected data for a share outstanding throughout the period.
Period Ended April 30, 2016 (Unaudited)(a) | ||||
Net asset value, at beginning of period | $10.00 | |||
|
| |||
Income from investment operations: | ||||
Net investment income (loss) | 0.01 | |||
Net realized and unrealized gain (loss) on investments | (0.91 | ) | ||
|
| |||
Total from investment operations | (0.90 | ) | ||
|
| |||
Distributions from: | ||||
Net investment income | (0.01 | ) | ||
|
| |||
Total from distributions | (0.01 | ) | ||
|
| |||
Redemption fees (b) | — | |||
Net asset value, at end of period | $9.09 | |||
|
| |||
Total Return (c) | (9.00 | )%(d) | ||
Ratios/Supplemental Data: | ||||
Net assets at end of period (thousands) | $5,707 | |||
Before waiver: | ||||
Ratio of expenses to average net assets | 6.31 | %(e) | ||
Ratio of net investment income (loss) to average net assets | (5.14 | )%(e) | ||
After waiver: | ||||
Ratio of expenses to average net assets | 0.95 | %(e) | ||
Ratio of net investment income (loss) to average net assets | 0.22 | %(e) | ||
Portfolio turnover (f) | 20 | %(d) |
(a) | For the period November 3, 2015 (commencement of operations) through April 30, 2016. |
(b) | The amount is less than $0.005 per share. |
(c) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of distributions. |
(d) | Not annualized |
(e) | Annualized |
(f) | Portfolio turnover is calculated on the basis on the Fund as a whole without distinguishing among the classes of shares. |
23
See accompanying notes which are an integral part of these financial statements.
Dana Small Cap Equity Fund – Investor Class
Financial Highlights
Selected data for a share outstanding throughout the period.
Period Ended April 30, 2016 (Unaudited)(a) | ||||
Net asset value, at beginning of period | $10.00 | |||
|
| |||
Income from investment operations: | ||||
Net investment income (loss) | — | (b)(c) | ||
Net realized and unrealized gain (loss) on investments | (0.93 | ) | ||
|
| |||
Total from investment operations | (0.92 | ) | ||
|
| |||
Distributions from: | ||||
Net investment income | (0.01 | ) | ||
|
| |||
Total from distributions | (0.01 | ) | ||
|
| |||
Redemption fees | — | |||
Net asset value, at end of period | $9.07 | |||
|
| |||
Total Return (d) | (9.23 | )%(e) | ||
Ratios/Supplemental Data: | ||||
Net assets at end of period (thousands) | $2,026 | |||
Before waiver: | ||||
Ratio of expenses to average net assets | 6.56 | %(f) | ||
Ratio of net investment income (loss) to average net assets | (5.39 | )%(f) | ||
After waiver: | ||||
Ratio of expenses to average net assets | 1.20 | %(f) | ||
Ratio of net investment income (loss) to average net assets | (0.03 | )%(f) | ||
Portfolio turnover (g) | 20 | %(e) |
(a) | For the period November 3, 2015 (commencement of operations) through April 30, 2016. |
(b) | Per share net investment income has been determined on the basis of average shares outstanding during the period. |
(c) | The amount is 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 distributions. |
(e) | Not annualized |
(f) | Annualized |
(g) | Portfolio turnover is calculated on the basis on the Fund as a whole without distinguishing among the classes of shares. |
24
See accompanying notes which are an integral part of these financial statements.
Dana Funds
Notes to Financial Statements
April 30, 2016 (Unaudited)
NOTE 1. ORGANIZATION
The Dana Large Cap Equity Fund (the “Large Cap Equity Fund”) and the Dana Small Cap Equity Fund (the “Small Cap Equity Fund”) (each a “Fund” and collectively, the “Funds”) are each 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 Board of Trustees (“Board”) to issue an unlimited number of shares of beneficial interest of separate series without par value. Each Fund is one of a series of funds currently authorized by the Board. The investment adviser to the Funds is Dana Investment Advisors, Inc. (the “Adviser”). Each Fund seeks long-term growth of capital.
The Large Cap Equity Fund currently offers Class N shares, Class A shares, and Institutional Class shares, and the Small Cap Equity Fund currently offers Investor Class shares and Institutional Class shares. Each share represents an equal proportionate interest in the assets and liabilities belonging to the Fund and is entitled to such dividends and distributions out of income belonging to the Fund as declared by the Board. Class A currently has a maximum sales charge on purchases of 5.00% as a percentage of the original purchase price. All share classes impose a 2.00% redemption fee on shares redeemed within 60 days of purchase.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The Funds are investment companies and follow 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 Funds 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”).
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.
Securities Valuation – All investments in securities are recorded at their estimated fair value as described in Note 3.
Federal Income Taxes – The Funds make no provision for federal income or excise tax. The Funds intend 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 Funds also intend to distribute sufficient net investment income and net capital gains, if any, so that it will not be subject to excise tax on undistributed income and gains. If the required amount of net investment income or gains is not distributed, the Funds could incur a tax expense.
25
Dana Funds
Notes to Financial Statements (continued)
April 30, 2016 (Unaudited)
For the period ended April 30, 2016, the Funds did not have a liability for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense on the statements of operations. During the period, the Funds did not incur any interest or penalties.
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. Expenses attributable to any class are borne by that class. Income, realized gains and losses, unrealized appreciation and depreciation, and expenses are allocated to each class based on the net assets in relation to the relative net assets of the Fund.
Security Transactions and Related Income – The Funds follow industry practice and record 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.
Dividends and Distributions – Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The Funds intend to distribute substantially all of their net investment income quarterly. The Funds intend to distribute their net realized long-term and short-term capital gains, if any, annually. 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 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 NAV per share of the Funds.
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 a timely 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 particular valuation technique used to measure fair value including such 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
26
Dana Funds
Notes to Financial Statements (continued)
April 30, 2016 (Unaudited)
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 Funds’ 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 which is reported, 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 traded in the NASDAQ over-the-counter market are generally valued by a pricing service at the NASDAQ official closing price. Lacking a last sale price, an exchange security is generally valued by the pricing service at its last bid price.
When using the market quotations or close prices provided by a 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 Funds 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 policies adopted by and subject to review by the Board. These securities are generally categorized as Level 3 securities.
Investments in mutual funds, including money market mutual funds, are generally priced at the ending NAV provided by the pricing agent of the funds. These securities are categorized as Level 1 securities.
Short-term investments in fixed income securities, (those with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity), in the absence of an available
27
Dana Funds
Notes to Financial Statements (continued)
April 30, 2016 (Unaudited)
price may be valued by using the amortized cost method of valuation, which the Board has determined represents fair value. These securities are classified as Level 2 securities.
In accordance with the Trust’s valuation policies, 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 that the owner might reasonably expect to receive for them upon their current sale. Methods that are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market prices 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. Fair-value 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. Fair-value pricing may also be used in instances when the bonds the Funds may invest in default or otherwise cease to have market quotations readily available.
The following is a summary of the inputs used to value the Funds’ investments as of April 30, 2016:
Large Cap Equity Fund | Valuation Inputs | |||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 180,535,531 | $ | – | $ | – | $ | 180,535,531 | ||||||||
Short-Term Investments | 2,360,626 | – | – | 2,360,626 | ||||||||||||
Total | $ | 182,896,157 | $ | – | $ | – | $ | 182,896,157 |
Small Cap Equity Fund | Valuation Inputs | |||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 7,535,493 | $ | – | $ | – | $ | 7,535,493 | ||||||||
Short-Term Investments | 136,885 | – | – | 136,885 | ||||||||||||
Total | $ | 7,672,378 | $ | – | $ | – | $ | 7,672,378 |
* | Refer to Schedule of Investments for industry classifications. |
The Funds did not hold any investments at any time during the reporting period for which other significant observable inputs (Level 2) were used in determining fair value. The Funds did not hold any investments during the reporting period for 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 as of April 30, 2016.
28
Dana Funds
Notes to Financial Statements (continued)
April 30, 2016 (Unaudited)
NOTE 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Adviser, under the terms of the management agreement for each Fund (each an “Agreement”), manages the Funds’ investments subject to oversight of the Board. As compensation for its management services, the Funds are obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 0.70% and 0.80% of the average daily net assets of the Large Cap Equity Fund and the Small Cap Equity Fund, respectively. For the period ended April 30, 2016, the Adviser earned fees of $583,899 from the Large Cap Equity Fund and $14,712 from the Small Cap Equity Fund before the waivers described below. At April 30, 2016, the Large Cap Equity Fund owed the Adviser $78,968 and the Adviser owed the Small Cap Equity Fund $5,786.
The Adviser has contractually agreed to waive its management fee and reimburse certain operating expenses through February 28, 2017, 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, extraordinary expenses, fees and expenses paid under a distribution plan adopted pursuant to Rule 12b-1, fees and expenses paid under a shareholder services plan, and indirect expenses (such as “acquired funds fees and expenses”) do not exceed 0.73% for Class N, Class A and Institutional Class shares for the Large Cap Equity Fund and do not exceed 0.95% for the Investor Class and Institutional Class for the Small Cap Equity Fund.
Each fee waiver or expense 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 waiver or reimbursement occurred, provided that the Fund is able to make the repayment without exceeding the expense limitation that is in effect at the time of the recoupment or at the time of the waiver or reimbursement. The contractual agreement is in effect through February 28, 2017. The expense cap may not be terminated prior to this date except by the Board. For the period ended April 30, 2016, the Adviser waived fees of $161,686 from the Large Cap Equity Fund and $55,435 from the Small Cap Equity Fund.
The amounts subject to repayment by the Funds, pursuant to the aforementioned conditions are as follows:
Large Cap Equity Fund | ||||
Amount | Recoverable through October 31, | |||
$ 2,189 | 2016 | |||
$239,324 | 2017 | |||
$268,172 | 2018 | |||
$161,686 | 2019 |
Small Cap Equity Fund | ||||
Amount | Recoverable through October 31, | |||
$55,435 | 2019 |
The Trust retains Ultimus Asset Services, LLC (“Ultimus”), formerly Huntington Asset Services, Inc. (“HASI”), to provide the Funds with administrative, accounting, shareholder and compliance services, including all regulatory reporting. The Trust also retains Ultimus to act as each Fund’s transfer agent and to provide fund accounting services.
29
Dana Funds
Notes to Financial Statements (continued)
April 30, 2016 (Unaudited)
Expenses incurred by the Funds for these services are allocated to the individual Funds based on each Fund’s relative net assets. Certain officers and one Trustee of the Trust are members of management and employees of Ultimus. Unified Financial Securities, LLC (the “Distributor”) acts as the principal distributor of the Funds’ shares. Huntington National Bank is the custodian of the Funds’ investments (the “Custodian”). Effective at the close of business on December 31, 2015, Ultimus acquired HASI and the Distributor from Huntington Bancshares, Inc. (“HBI”). Prior to January 1, 2016, the Custodian, HASI and the Distributor were under common control by HBI. For the period ended April 30, 2016, fees for administrative and compliance services, transfer agent services, fund accounting services and reimbursement of out-of-pocket expenses net of any waivers were as follows:
Large Cap Equity Fund | Small Cap Equity Fund | |||||||
Administration | $ | 45,892 | $ | 1,453 | ||||
Fund accounting | 25,495 | – | ||||||
Transfer agent | 25,684 | 267 | ||||||
Payable to Ultimus | 16,936 | – |
Each Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“The 1940 Act”). The Plan provides that the Funds will pay the Distributor and any registered securities dealer, financial institution or any other person (a “Recipient”) a shareholder servicing fee aggregating up to 0.25% of the average daily net assets for each of the Class N, Class A and Investor Class shares in connection with the promotion and distribution of the Funds’ shares or the provision of personal services to shareholders, including, but not necessarily limited to, advertising, compensation to underwriters, dealers and selling personnel, the printing and mailing of prospectuses to other than current Fund shareholders, the printing and mailing of sales literature and servicing shareholder accounts. The Funds or the Adviser may pay all or a portion of these fees to any Recipient who renders assistance in distributing or promoting the sale of shares, or who provides certain shareholder services, pursuant to a written agreement. The Plan is a compensation plan, which means that compensation is paid regardless of 12b-1 expenses actually incurred. It is anticipated that the Plan will benefit shareholders because an effective sales program typically is necessary in order for the Fund to reach and maintain a sufficient size to achieve efficiently its investment objectives and to realize economies of scale. For the period ended April 30, 2016, Class N shares 12b-1 and Class A shares 12b-1 expense incurred by the Large Cap Equity Fund was $43,583 and $1,785, respectively and Investor Class shares 12b-1 expense incurred by the Small Cap Equity Fund was $1,512. The Large Cap Equity Fund owed $7,201 for Class N shares and $243 for Class A shares 12b-1 fees as of April 30, 2016 and the Small Cap Equity Fund owed $400 for Investor Class shares 12b-1 fees as of April 30, 2016.
During the period ended April 30, 2016, the Distributor received $531 from commissions earned on sales of Class A shares, of the Large Cap Equity Fund, of which $530 was re-allowed to intermediaries. An officer of the Trust is an officer of the Distributor and such person may be deemed to be an affiliate of the Distributor.
30
Dana Funds
Notes to Financial Statements (continued)
April 30, 2016 (Unaudited)
NOTE 5. PURCHASES AND SALES OF SECURITIES
For the period ended April 30, 2016, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations were as follows:
Large Cap Equity Fund | Small Cap Equity Fund | |||||||
Purchases | ||||||||
U.S. Government Obligations | $ | – | $ | – | ||||
Other | 62,205,658 | 8,498,243 | ||||||
Sales | ||||||||
U.S. Government Obligations | $ | – | $ | – | ||||
Other | 29,252,195 | 854,161 |
NOTE 6. BENEFICIAL OWNERSHIP
The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of a fund, under Section 2(a)(9) of the 1940 Act. At April 30, 2016, there were no beneficial owners, either directly or indirectly, of more than 25% of each Fund.
NOTE 7. FEDERAL TAX INFORMATION
At April 30, 2016, the net unrealized appreciation (depreciation) of investments for tax purposes was as follows:
Large Cap Equity Fund | Small Cap Equity Fund | |||||||
Gross Unrealized Appreciation | $ | 9,207,588 | $ | 305,934 | ||||
Gross Unrealized Depreciation | (3,907,954 | ) | (210,308 | ) | ||||
Net Unrealized Appreciation | $ | 5,299,634 | $ | 95,626 |
At April 30, 2016, the aggregate cost of securities for federal income tax purposes was $177,596,523 for Large Cap Equity Fund and $7,576,752 for Small Cap Equity Fund.
At April 30, 2016, the difference between book basis and tax basis unrealized appreciation for the Large Cap Equity Fund was attributable primarily to the tax deferral of losses on wash sales and the return of capital adjustments from real estate investment trusts.
At October 31, 2015, the Large Cap Equity Fund’s most recent fiscal year end, the components of distributable earnings (accumulated losses) on a tax basis was as follows:
Undistributed Ordinary Income | $ | 128,745 | ||
Undistributed Long-Term Capital Losses | (1,513,521 | ) | ||
Unrealized Appreciation (Depreciation)(a) | 6,205,792 | |||
Total Accumulated Earnings (Deficit) | $ | 4,821,016 |
(a) | The difference between book basis and tax basis unrealized appreciation (depreciation) is attributable to the tax deferral of losses on wash sales and income from certain investments . |
31
Dana Funds
Notes to Financial Statements (continued)
April 30, 2016 (Unaudited)
The tax character of distributions for the fiscal year ended October 31, 2015 for the Large Cap Equity Fund was as follows:
Distributions paid from: | ||||
Ordinary Income | $ | 1,351,560 | ||
Net Long-Term Capital Gains | 2,038,983 | |||
$ | 3,390,543 |
As of October 31, 2015, the Large Cap Equity Fund has available for tax purposes an unused capital loss carryforwards of $1,513,521 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.
NOTE 8. COMMITMENTS AND CONTIGENCIES
The Funds indemnify its officers and trustees for certain liabilities that may arise from performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred.
NOTE 9. SUBSEQUENT EVENTS
Management of the Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date these financial statements were issued. There were no items requiring adjustment of financial statements or additional disclosure.
32
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.
33
PROXY VOTING
A description of the policies and procedures that each Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how each Fund voted those proxies during the most recent twelve month period ended June 30, is available without charge upon request by (1) calling the Funds at (855) 280-9648 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
Dana Investment Advisors, Inc.
15800 Bluemound Rd., Suite 250
Brookfield, WI 53005
DISTRIBUTOR
Unified Financial Securities, LLC
2465 Counselors Row, Suite 200
Indianapolis, IN 46240
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
Huntington National Bank
41 S. High St.
Columbus, OH 43215
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT
Ultimus Asset Services, LLC
225 Pictoria Drive, Suite 450
Cincinnati, OH 45246
This report is intended only for the information of shareholders or those who have received the Funds’ prospectus which contains information about the Funds’ management fee and expenses. Please read the prospectus carefully before investing.
Distributed by Unified Financial Securities, 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. |
-2-
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 6/28/2016 |
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 6/28/2016 | ||
By | /s/ Bryan W. Ashmus | |
Bryan W. Ashmus, Treasurer and Principal Financial Officer | ||
Date 6/28/2016 |
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